Australia lost 39,300 jobs in September, against forecasts for a 20,000 rise. The RBA's November decision remains tied to third-quarter inflation due on 28 October, with AUD/USD near 0.6909.
The Australian Bureau of Statistics counted 14,782,700 people in work after September's sharp reversal. Employment fell by 39,300, though economists had expected a gain of 20,000. Unemployment climbed to 4.7%, its highest level in about five years, as the number of people without work rose by 8,900 to 732,000. The participation rate slipped to 66.8% and the employment-to-population ratio to 63.6%.
The figures came out on 15 October. The ABS revised August employment growth to 29,300 and lifted that month's unemployment rate from 4.6% to 4.7%. Its September labour-force release includes the revised figures and the September participation-rate data.
By Thursday afternoon, AUD/USD was near 0.6909, about 1% below Wednesday's close. A separate latest market snapshot put the pair at 0.69204, down 0.83%. Those figures capture different reported points in the market update.
Inflation remains the deciding test
Goldman Sachs expects the RBA to hold rates, but says its November call depends on the third-quarter 2026 consumer price index report, due on 28 October. The employment figures strengthen the case for a pause. They do not settle the policy question.
The distinction matters because the RBA had renewed its tightening message, and inflation risks remain amid expensive energy and developments in the Middle East. Before the employment release, Westpac economist Ryan Wells had warned that inflation was the RBA's immediate focus. Another weak unemployment reading, he said, could complicate the bank's communication.
The Australian dollar's fall also came as fresh US inflation concerns surfaced. US producer prices rose 1.3% month on month in September, after Wednesday's consumer-inflation surprise. If expectations for US interest rates stay elevated, an Australian pause may offer the currency little support against the US dollar.
An earlier US jobs-market report examined how softer American hiring affected expectations for Federal Reserve policy. The latest Australian figures shift attention to the local labour market and the RBA's conditional outlook.
A weak headline, with firmer details
Part-time work drove the overall decline, falling by 73,700. Full-time employment rose by 34,400, limiting the net loss. Annual employment growth slowed by 0.3 percentage points to 1.2%.
Hours worked edged up 0.1% month on month despite the fall in total employment. Annual growth in hours slowed to 1.3%. The underemployment rate rose from 6.2% to 6.3%, while trend employment increased by 15,700 in September. Those figures soften the headline picture, but unemployment still rose.
The ABS has warned that changes to survey collection may still affect seasonally adjusted figures. Its quality checks found the September statistics fit for use, subject to that qualification. The Labour Force Survey covers labour-market activity among Australia's resident civilian population aged 15 and over. The bureau also publishes trend estimates alongside its seasonally adjusted monthly figures.
The labour market in context
Unemployment averaged 4.6% in the third quarter of 2026, up from 4.4% in the second quarter. Goldman Sachs says the quarterly average is 60 basis points above the start of the year and matches the RBA's estimated non-accelerating inflation rate of unemployment, or NAIRU, at 4.6%. That estimate sits slightly above the RBA's most recent forecasts of 4.4% to 4.5%.
Goldman Sachs also notes that unemployment has risen by more than consensus expectations for three consecutive months. The figures point to gradual labour-market softening. Still, the fall in part-time work alongside stronger full-time hiring cautions against treating one month's net loss as proof of an abrupt downturn. The trend measure showed employment rising by 15,700 in September, a less severe monthly picture than the seasonally adjusted result.
The RBA raised its cash rate four times in 2026, taking it to 4.60%. After the jobs report, Reuters reported that markets priced in about a 90% chance of the RBA holding at 4.6% at its November meeting, up from 66% before the release. The market-implied chance of a December increase fell to about 32%. That shift strengthened expectations of a pause rather than an immediate cut, with inflation still a key condition for the decision.
The next policy marker is the third-quarter CPI report on 28 October, which Goldman Sachs identifies as the condition for its November RBA view. The RBA's next meeting was scheduled for 2-3 November.
