Australia’s job market is shifting, and it’s sparking a debate about what’s next for the economy. The unemployment rate has climbed to 4.5% in September, up from 4.3% in August, marking the highest level since November 2021 when adjusted for seasonal changes. But here’s where it gets controversial: while some economists argue this signals a need for another interest rate cut by the Reserve Bank next month, others believe the labor market is simply cooling—not collapsing. So, what’s really going on?
David Bassanese, chief economist at BetaShares, points out that despite monthly fluctuations, the demand for jobs has undeniably slowed in recent months. He emphasizes, ‘The labor market is no longer keeping up with the number of people seeking work, pushing the unemployment rate to 4.5%.’ This figure aligns with the Reserve Bank’s definition of full employment, meaning the bank can no longer describe the job market as tight. But is this a cause for alarm, or just a natural adjustment?
The data reveals that the number of unemployed individuals rose by 33,900 in September, while employment increased by only 14,900. The labor force itself grew by 48,800, pushing the participation rate up by 0.1 percentage points to 67%, matching July’s level. In trend terms, which smooth out seasonal variations, the unemployment rate held steady at 4.3%. Yet, the question remains: Are we witnessing a temporary slowdown or the beginning of a broader economic shift?
Anders Magnusson, BDO’s chief economist, argues that the labor market is cooling but far from collapsing. He notes that the 14,900 jobs added in September were slightly below the past year’s average, but not drastically so. Magnusson also highlights that rising living costs are pushing more people into the workforce, as evidenced by the increased participation rate. ‘Today’s data confirms a gradual cooling, not a crisis,’ he says. ‘Hiring is slowing, with job ads dropping by 3.3% in September—the largest monthly decline since February 2024—but the fundamentals remain on track.’ Still, he doesn’t expect a rate cut in November. And this is the part most people miss: if the economy isn’t overheating, why the rush to cut rates?
Here’s the controversial question: Is the Reserve Bank’s next move a rate cut, or should they hold steady? Some argue that a cut is necessary to stimulate growth, while others believe it could disrupt the delicate balance of the current market. What do you think? Is Australia’s labor market heading toward trouble, or is this just a natural ebb and flow? Share your thoughts in the comments—let’s spark a debate!
