Australia's unemployment rate rose to 4.7% in September, exceeding forecasts and signaling a loosening labor market. The economy shed 39,300 jobs against a predicted 20,000 gain, while the participation rate fell to 66.8%. Traders have dramatically scaled back bets on further Reserve Bank of Australia rate hikes, with November odds falling below 20% from 35% earlier.
A December tightening is now seen as a 40% probability, down from 60%. The RBA has raised rates by a full percentage point this year to 4.6% in its aggressive inflation fight. Despite the board viewing the labor market as "a bit tight," the jobs report offers evidence of easing conditions that could relieve inflationary pressures.
The Australian dollar slipped 0.2% and bond yields dropped 11 basis points to 4.80% as investors trimmed rate expectations. May 2027 OIS contracts now show an 80% chance of a peak rate, the highest reading on the strip. The jobs data represents half of the RBA's dual mandate alongside inflation control.
Australia has grappled with resurgent price pressures since late 2025, a challenge compounded by global fuel price surges following the US-Israeli attack on Iran. US consumer prices also advanced at the fastest pace in five months in September, bolstering expectations of further Federal Reserve action.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing