September unemployment rates climb even higher

September’s unemployment rate has reached a level that many hope means strict monetary policy is taking effect.

After August’s unemployment rate was revised to 4.7 per cent from its previously announced 4.6 per cent figure, data released today (15 October) revealed that September remained at the five-year unemployment high.

Australian Bureau of Statistics (ABS) head of labour statistics Sean Crick said: “This September a higher proportion of people remained unemployed compared to recent years.”

The economy saw 39,000 less employed people and 9,000 more unemployed people in September, driven primarily by a drop in part-time work, which saw 73,700 less jobs, signalling slower hiring and general business activity.

“As a result, the employment to population ratio fell 0.3 percentage points to 63.6 per cent, and the participation rate fell 0.2 percentage points to 66.8 per cent,” Crick said.

“This follows from last month when a higher proportion of people who were previously not in the labour force moved to being unemployed.”

The number of part-time hours fell 1.5 per cent this month, while full-time hours worked rose by 0.4 per cent.

“Employment and hours worked are closely aligned in annual growth, up 1.2 per cent and 1.3 per cent, respectively,” Crick said.

Further trend employment grew by 0.1 per cent, and trend underemployment remained steady at 6.3 per cent in September.

BDO chief economist Anders Magnusson said: “The unemployment rate on its own does not tell the whole story.”

“Last month, unemployment increased because more people entered the labour force than found jobs. This month is different. Employment declined and fewer people participated in the labour market, pointing to weaker labour demand rather than stronger labour supply.

“The result suggests that the labour market is moving further in the direction the Reserve Bank has been seeking. Higher interest rates and slower economic activity may be easing the competition for workers that contributed to domestic inflation pressures in recent years. The increase in underemployment provides further evidence that conditions are softening.

“Economic growth is already subdued, and today’s result suggests some businesses are becoming more cautious about hiring as demand slows. Households are still facing cost-of-living pressures, but job security has been an important source of resilience.

“If labour market conditions continue to soften, concerns about economic growth may begin to carry more weight alongside concerns about inflation.

“While inflation remains above target and the RBA is unlikely to consider cutting rates any time soon, today’s figures weaken the case for another increase in November.”

Further, Employment Hero APAC managing director James Keene said: “Today’s fall in employment, with unemployment still elevated, will be felt by the people affected and by the business owners who have spent months trying to avoid exactly this.”

“With the cash rate at 4.60 per cent and costs still high, many are weigh[ing] every hiring decision very carefully.”

Noting that Employment Hero’s monthly Employment Index showed September headcount rose 0.8 per cent, and the quarterly headcount saw its lowest growth in two years, while wage growth also dropped to 2.2 per cent year on year, Keene said business owners have “absorbed months of higher costs and keeping their teams together is coming ahead of offering pay rises”.

“This suggests many hirers are being very selective about adding headcount until costs and rates settle,” he said.

“For most small and medium businesses we speak with, they’re focused on controlling costs and finding ways to use technology and AI to take over the repeat admin that holds them back from growth.”

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