Unemployment shock as jobless rate hits five-year high, nearly 40,000 Aussies fall out of work

The unemployment rate has unexpectedly jumped to a post-COVID high for the second month in a row, after nearly 40,000 Australians fell out of work.

New figures released by the Australian Bureau of Statistics on Thursday morning showed the jobless rate for September hit 4.7 per cent – higher than economists′ forecasts of 4.6 per cent.

The ABS also revised last month’s figure of 4.6 per cent – which had already been an unexpectedly high rate – up to 4.7 per cent.

It is the worst unemployment rate since October 2021, when Australia was only just emerging from COVID-era lockdowns and 5.2 per cent of the workforce was looking for a job.

“This month there were 39,000 less employed people and 9000 more unemployed people,” ABS head of labour statistics Sean Crick said.

“As a result, the employment to population ratio fell 0.3 percentage points to 63.6 per cent, and the participation rate fell 0.2 percentage points to 66.8 per cent.

“This September a higher proportion of people remained unemployed compared to recent years.

“This follows from last month when a higher proportion of people who were previously not in the labour force moved to being unemployed.”

While a blow for the tens of thousands of Australians who lost their job, the higher rate may stave off another interest rate hike before Christmas.

“The rise in the unemployment rate to 4.7 per cent gives the RBA more room to be patient and assess incoming inflation data before raising rates again,” Oscar Guth from Oxford Economics Australia said.

“This is consistent with our view that a further rate hike will come in the first quarter of next year.”

Reserve Bank Governor Michele Bullock has previously said the unemployment rate may need to rise to as high as 5 per cent to rein in inflation, and therefore allow interest rates to stop rising and eventually ease.

Guth said it was likely that more people will fall out of work in the coming months.

“We expect unemployment to rise further through 2027, exceeding 4.8 per cent late in the year as the lagged effects of oil price shocks and tighter monetary policy continue to affect the labour market,” he said.