Australia’s unemployment rate jumped to 4.5 per cent in September, the highest in four years, up from 4.3 per cent the month before.
This comes as a bit of a shock to all of us, given that both the Reserve Bank of Australia (RBA) and the federal budget forecasts expected unemployment to peak at 4.3 per cent this year and remain at that level through 2026.
The Australian Bureau of Statistics (ABS) reported that there were 34,000 more unemployed people in September; however, the number of employed people also increased by 15,000 during the same period.
One of the big four banks, ANZ, and Indeed, an employment group, also reported that between August and September, the number of job ads fell by 0.3 per cent, the steepest decline since February 2024.
But, we don’t need to panic, at least not yet.
Economists say much of the recent uptick stems from a slowdown in the “care economy.” The “care economy” includes sectors such as aged care, healthcare, and disability support, which experienced a hiring boom during and after the COVID-19 pandemic, even as overall economic growth was slower, helping to prop up employment at a time when economic growth was sluggish.
Now, we’re seeing “the dynamic reverse”, says Pat Bustamante, an economist at Westpac.
“Employment growth has slowed even as the overall economy has picked up.”
Treasurer Jim Chalmers struck a cautious but upbeat tone, pointing out that 15,000 jobs were still created in September despite the higher unemployment rate.
“Unemployment remains historically low,” Chalmers said. “What we’re seeing is a transition in the labour market as growth moderates.”
The RBA will be closely monitoring the data ahead of its next meeting. The bank has been trying to cool inflation without triggering a recession, and a steady increase in unemployment could complicate that balancing act.
Economists say the key question now is whether private sector hiring can offset the fading boost from public and care-related employment.
If it can’t, Bustamante warns, the jobless rate could rise to 4.8 per cent by early next year, wiping out most of the post-pandemic labour market gains.
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