Australia’s jobless rate hits five-year high in August as more seek work

SYDNEY – Australian employment rose more than forecast in August, but the unemployment rate still hit a five-year high as more people went looking for work, data showed on Sept 24.

The mixed report was not enough to shift already firm market bets that the Reserve Bank of Australia (RBA) would raise interest rates next week for the fourth time in 2026.

Markets have priced in a 95 per cent chance the policy rate will rise to 4.6 per cent. The Australian dollar, however, slipped 0.2 per cent to US$0.7026, a seven-week low after heavy losses overnight.

Net employment rose 39,500 in August from July, when it fell 15,800, data from the Australian Bureau of Statistics (ABS) showed on Sept 24. That was above market forecasts for a 20,000 increase and driven entirely by part-time roles.

The jobless rate rose to 4.6 per cent, above forecasts for a steady 4.5 per cent and the highest level since late 2021, as the participation rate climbed to 67.1 per cent, up 0.2 percentage point. Hours worked rose 0.7 per cent.

The ABS said it recorded a higher proportion of people who were previously not in the labour force moving to be unemployed.

“Employment growth failed to keep pace with the influx of people into the labour force in August, easing some of the tightness in the labour market,” said Oscar Guth, an economist for Oxford Economics Australia.

“Even so, inflation pressures extend well beyond the labour market, with oil above US$100 a barrel and trimmed mean inflation stuck at 3.6 per cent in July,” said Guth, adding that he expected the RBA to hike on Sept 29.

For August, the labour force rose by 67,700, up 2.1 per cent from a year earlier, while employment rose a slower 1.6 per cent, suggesting the labour market is gradually loosening. That is consistent with the RBA’s judgment that the labour market has eased a little but remains tight.

Governor Michele Bullock said this week unemployment in a range of 4.5 per cent to 5 per cent could help restrain inflation, suggesting some rise might be needed from here.

The central bank has raised interest rates three times in 2026 to 4.35 per cent to tame inflation, matching a post-pandemic high. Yet, core inflation is still running at 3.6 per cent, well above the RBA’s target range of 2 per cent to 3 per cent.

Bullock has warned inflation risks are materialising off the back of the Middle East conflict and a data centre investment boom. With oil back above US$100 a barrel, markets have sharply repriced the global rate outlook, with Australia’s cash rate now seen peaking at 5.1 per cent. REUTERS