Unemployment rises to 4.7 per cent in September for the first time since 2021

Unemployment has risen to 4.7 per cent for the first time in five years with economists fearing the Reserve Bank will hike rates again in three weeks’ time at the expense of jobs in a desperate bid to curb inflation.

The jobless rate last month hit the highest level since October 2021, when Sydney and Melbourne were still in COVID lockdown, with 39,300 jobs lost.

This was worse than market forecasts of unemployment holding steady at 4.6 per cent in September as 19,600 jobs were created.

The Australian Bureau of Statistics released the figures on Thursday, two days after the International Monetary Fund predicted a 4.7 per cent jobless rate for 2027.

The RBA’s forecasts in August didn’t have unemployment reaching 4.7 per cent until December 2027.

Youth unemployment is more than double the national average at 11.1 per cent, with shadow employment minister and deputy Liberal leader Jane Hume describing it as a poor reflection on Labor.

“That’s a genuine concern for Australians, particularly young Australians, who were promised more opportunities under Labor,” Senator Hume said.

“When you can’t manage your economy, when you can’t manage your Budget, when your economic model fails, it’s Australians that pay the price.”

Ebury economist Anthony Malouf said it appeared the RBA would be more inclined to focus on bringing down inflation, with another rate hike on November 3 shortly before the Melbourne Cup, at the expense of the labour market.

“This is the last labour market print before the RBA’s November meeting. If the RBA does raise rates, we expect it this side of the year, most likely in November, but we think the weight has shifted towards inflation,” he said.

“The RBA looks willing to let the labour market cool to bring inflation down.”

Any further rate in inflation could see the RBA fail its dual mandates on full employment and controlling inflation.

“With unemployment now at 4.7 per cent, the labour market is sitting close to full employment on either estimate, so there isn’t much slack to pull inflation down,” Mr Malouf told The Nightly.

VanEck’s head of investments and capital markets Russel Chesler said the RBA was prepared to see unemployment increase.

“Even though the unemployment rate has increased slightly to 4.7 per cent, inflation will be the primary factor that the RBA will be looking at when deciding whether to increase rates,” he said.

“We could very well see rates still increase this year, with inflation remaining stubborn.”

Full-time employment increased by 34,400 while part-time employment fell by 73,700 people, with Moody’s Analytics’ head of Australian economics Sunny Nguyen painting this as a bad sign.

“Firms are cutting shifts and casual hours first while holding on to full-time staff, a pattern typical of an early hiring downturn,” she said.

“The pullback in participation likely includes discouraged workers, so the headline rate may understate the slack now building.”

August’s inflation rate of 4 per cent was also above the RBA’s 2-3 per cent target for the 13th straight month.

Victoria had Australia’s highest unemployment rate of 5.1 per cent, which doesn’t bode well for Premier Ben Carroll as he tries next month to win Labor a fourth consecutive term.

Tasmania had the second highest jobless rate of 5 per cent, just 13 months after having Australia’s lowest jobless rate of 3.3 per cent.

Resources-rich WA a had the nation’s lowest unemployment rate of 4.2 per cent, equal with South Australia.

Queensland’s jobless rate of 4.5 per cent was also below-average while NSW was equal to the national average at 4.7 per cent.

RBA Governor Michele Bullock last month denied the central bank would be simultaneously failing its dual mandates on the labour market and inflation, after her monetary policy board voted unanimously to raise the cash rate to a 15-year high of 4.6 per cent.

Both have worsened since the RBA’s monetary policy board voted unanimously to hike rates for the fourth time this year, with unemployment and inflation both confirmed to have worsened since that decision.

“Well, I wouldn’t call inflation of 3.5 per cent and an unemployment rate of 4.6 per cent stagflation,” Ms Bullock said on September 29, citing July inflation and August unemployment data.

“That’s a pretty good unemployment rate historically. Stagflation you typically associate with very high inflation and very high unemployment, and I don’t think we have very high unemployment.”