Australia’s unemployment rate in October falls to 3.4 per cent in sign of more interest rate rises

Interest rates will continue to rise and unemployment will fall to a 48-year low of 3.4 percent.

New data from the Australian Bureau of Statistics was released on Thursday, a day after wage growth rose to its highest level in nearly a decade.

Unemployment fell to 3.4 percent in October, equaling its lowest level in July in 48 years, beating market expectations of the unemployment rate rising from 3.5 percent in September to 3.6 percent.

The Commonwealth Bank’s head of Australia’s economy, Gareth Aird, said the drop in unemployment meant the Reserve Bank was likely to raise rates by a further 0.25 percentage point in December to a new 10-year high of 3, 1 percent, which would be the eighth consecutive monthly increase. .

“We believe today’s labor force data will signal a further 25 basis point interest rate hike at the December board meeting,” he said.

Interest rates will continue to rise and unemployment will fall to a 48-year low of 3.4 percent. New data from the Australian Bureau of Statistics was released on Thursday, a day after it showed wage growth had risen to its highest level in nearly a decade (pictured are construction workers in Sydney)

Another rate hike of 0.25 percent would mean a borrower with an average $600,000 mortgage would owe an additional $91 per month for their repayments, bringing them to $3,236 while a variable rate from the Commonwealth Bank rose to 5.04 per cent.

Mr Aird said there were risks if the Reserve Bank raised rates further in 2023.

“We believe the RBA is very aware of the risk of over-tightening and inadvertently landing hard,” he said.

“We expect labor market data to loosen in the coming months as the lagged impact of increases slows demand and continued increases in foreign arrivals add to labor supply.”

NSW had the lowest unemployment rate at 3 per cent compared to 3.6 per cent in Victoria, 3.3 per cent in Queensland, 3.6 per cent in Western Australia, 4.1 per cent in South Australia and 4 per cent in Tasmania, based on seasonally adjusted figures.

In the territories, the ACT had an unemployment rate of 3.2 percent, compared to 3.8 percent in the Northern Territory.

A tight labor market and a wage increase of 3.1 percent – the highest level since 2013 – mean the Reserve Bank of Australia is likely to continue raising the cash rate from its current nine-year high of 2.85 percent.

That’s because a lower employment rate leads to higher wages, which contribute to inflation, already at a 32-year high of 7.3 percent in the year to September.

The Commonwealth Bank’s head of Australia’s economy, Gareth Aird, said the drop in unemployment meant the Reserve Bank was likely to raise interest rates by a further 0.25 percentage point in December to a new 10-year high of 3 .1 percent (photo is auction in Melbourne).

Nationally, the number of people without a job fell by 20,600 to 477,600 in October.

The number of people in work rose by 32,200 to 13,617,900, while the participation rate remained stable at 66.5 percent.

The number of full-time jobs rose by 47,000.

EY chief economist Cherelle Murphy said interest rate hikes are likely to increase unemployment in 2023.

“We don’t expect the job market to get stronger from here,” she said.

“For companies, higher input costs and pressure on their customers, plus higher interest rates, mean demand for labor will stabilize before it eventually weakens.”