Unemployment Reaches Four-Year Peak Increasing Pressure on RBA to Slash Interest Rates

Unemployment rates across Australia have reached a four-year high, with every state and territory reporting figures above 4%. The situation is particularly concerning in Victoria, which recorded an unemployment rate of 4.7%, marking a 0.3 percentage point increase from the previous month.

Significant Job Losses in Major States

New South Wales (NSW), the largest jobs market in the country, has also seen alarming trends. In the first nine months of last year, over 57,000 jobs were created. In contrast, the state experienced a loss of 22,100 jobs during the same period this year. Victoria’s job growth has also diminished significantly, dropping from 111,000 last year to 63,600 this year.

Employment growth has slowed in traditionally robust job markets like Queensland and Western Australia (WA) as well. WA has managed to add only 400 jobs so far this year.

Government Insights and Economic Implications

Amid these troubling statistics, Treasurer Jim Chalmers, attending International Monetary Fund talks in Washington, emphasized the prevailing low unemployment rates and high labor market participation. He noted that 15,000 jobs were created in September, reinforcing that “despite global uncertainties, job creation remains robust.”

However, shadow treasurer Ted O’Brien attributed the rise in unemployment to excessive government spending, warning it could result in persistent inflation. This situation would compel the Reserve Bank of Australia (RBA) to maintain higher interest rates for an extended period.

Reserve Bank’s Economic Forecasts

The RBA plans to release updated economic forecasts next month, anticipating an increase in the jobless rate to approximately 4.3% by the end of the year. They project employment growth at 1.6% until 2025.

Expert Opinions on Interest Rates

• Brendan Rynne, KPMG chief economist, expressed that the RBA should prioritize the declining job market over short-term inflation fluctuations. He recommends lowering the cash rate to bolster business investments and household spending.
• Amp economist My Bui indicated that since the last RBA meeting, reports on consumer confidence and household spending have been disappointing. She anticipates a reduction in interest rates next month, followed by another cut in February 2026.
• Paul Bloxham from HSBC Australia highlighted recent job statistics as evidence for the necessity of further reductions in interest rates, noting a marked slowdown in job creation.

The deteriorating employment landscape increases pressure on the RBA to implement strategies that can support job growth and economic stability. With predictions and analyses suggesting further rate cuts, businesses and households alike await the forthcoming decisions from the Reserve Bank.