Australia loses 39,300 jobs, and a November rate hike looks less likely

Australia lost 39,300 jobs in September 2026, the Australian Bureau of Statistics said Thursday. Reuters said it was the biggest monthly drop since February 2025, against a forecast gain of about 20,000.

The unemployment rate rose 0.1 percentage point to 4.7%, a five-year high. The number of unemployed people rose 8,900.

August, first reported at 4.6%, was revised to 4.7%, so the rounded figure did not change. The bureau measures that increase from unrounded estimates.

Interest-rate markets put a nearly 90% chance the Reserve Bank of Australia (RBA) leaves its cash rate unchanged in November, up from 66% before the release, Reuters reported.

The chance of a December increase fell to 32%, the Australian dollar slipped 0.3% to US$0.6953 in intraday trading, and three-year government bond futures rose, Reuters reported. A rise in those futures means a lower yield. Reuters said a rally in government bonds overseas helped that move.

The monthly figure is a noisy one

The bureau's 95% confidence interval on the change in jobs ran from a loss of 105,500 to a gain of 26,900. Full-time employment rose 34,400, and hours worked increased 0.1%. In the trend series, unemployment stayed at 4.6% and employment grew 0.1%.

The bureau said survey changes may have left a small residual effect on the September seasonally adjusted figures, and it recommends the trend series as the best measure of the underlying market.

Minutes of the RBA's Sept. 29 meeting, published Oct. 13, had already said considerable caution is warranted with the official labor force data, because of methodological changes to the survey. Most forward-looking indicators pointed to stability, the minutes said, though some job advertisements appeared to be strengthening a little.

Markets still moved the chance of an unchanged rate in November from 66% to nearly 90%, on a print whose own interval includes a gain.

The loss was in part-time work

Part-time employment fell 73,700. Full-time hours rose 0.4%, and part-time hours fell 1.5%.

"Firms are cutting shifts and casual hours first while holding onto full-time staff, a pattern typical of an early hiring downturn," Sunny Nguyen, head of Australia economics at Moody's Analytics, told Reuters.

The participation rate fell 0.2 percentage points to 66.8%, and the employment-to-population ratio fell 0.3 percentage points to 63.6%. Employment fell by 39,300 while unemployment rose by 8,900, so on net people left the labor force.

Inflation is still above the target

On Sept. 29 the RBA raised the cash-rate target by 25 basis points to 4.60%, its fourth increase this year. Minutes of that meeting said the board would continue to do what it considered necessary, "including increasing the cash rate target further if required."

Consumer prices rose 4.0% in the year to August, up from 3.5% in the year to July, the bureau said on Sept. 30. The trimmed mean, which leaves out the largest price moves, held at 3.6% for a third month. The bureau said fuel and electricity, both excluded from that measure, drove the gap with the 4.0% headline rate. Both readings sit above the RBA's target band of 2% to 3%.

The next inflation release is Oct. 28, the September consumer-price report. The bureau adds that quarter's consumer-price index to the publication, as it does at each quarter's end.

The cash-rate decision is at 2:30 p.m. Sydney time on Nov. 3. The October jobs report does not arrive until Nov. 19.

"For the RBA, the hurdle for an immediate hike has therefore risen materially, but we would not take further tightening off the table," Krishna Bhimavarapu, an Asia-Pacific economist at State Street Investment Management, said in a note.

"Unless the upcoming quarterly CPI surprises sharply to the upside, we expect a hold in November, with the risk tilting toward an overshoot in unemployment next year," Nguyen told Reuters.