Labour market still hot with more than 60,000 jobs added last month, says ABS

Australia’s “remarkable” jobs boom is showing no signs of slowing down, with more than 430,000 workers hired in the past year.

The news sparked Treasurer Jim Chalmers to declare the performance “a pretty remarkable achievement in a slowing economy”.

But the strength is also likely to push back rate relief for borrowers — and could even spark another hike.

About 64,000 workers found jobs in September alone, according to Australian Bureau of Statistics data released on Thursday.

That far surpassed expectations and shows the economy is absorbing both the flow of workers driven by immigration and the record share of Australians wanting to work.

Mr Chalmers said more than one million jobs had been created since the 2022 election.

“We welcome the fact that the majority of these million new jobs are full time and around half are for women,” he said.

“We’re all about more people working, earning more and keeping more of what they earn and this shows we’re making good progress.”

But shadow minister Michaelia Cash warned that much of the growth was in the public sector.

“The private sector is growing at a much slower rate than the public sector. This is not sustainable,” Senator Cash said.

“The Albanese Government is all about increasing the size of the public sector, whilst attacking the private sector with red tape and uncertainty.”

Backing that concern was analysis by KPMG showing more than 80 per cent of the extra hours worked in the past three months were in industries with a high level of government support including education, safety and healthcare.

KPMG chief economist Brendan Rynne said the trend from private to public employment would be a big factor in the country’s stalling productivity.

Dragging productivity is one reason why the Reserve Bank has been reluctant to cut interest rates despite slow economic growth.

The robust jobs figures only add to the list.

The RBA has watched with an eagle eye to see if the dramatic tightening of interest rates starting in 2022 would lead to a lift in unemployment.

With the jobless rate at 4.1 per cent, the central bank will probably be comforted that a “soft landing” is in sight.

“Today’s labour market figures suggest the jobs market remains unquestionably strong,” HSBC chief economist Paul Bloxham said.

“The figures delivered another significant upside surprise to employment, the participation rate rose to yet another all-time high, and the unemployment rate was at 4.1 per cent.”

Mr Bloxham said the numbers were better than the RBA would have expected, and meant an interest rate cut is not likely until the June quarter next year.

That’s later than most other economists expect.

EY senior economist Paula Gadsby said the labour market’s strength was “remarkable”.

The unemployment rate was well below the average in the five years before COVID-19, she said, contrasting with other big economies.

The jobless rate is believed to be below the long-term sustainable level known as full employment, however.

“The Reserve Bank remains alert to the risk the strong jobs market poses to inflation, especially if productivity growth remains weak,” Ms Gadsby said.

“This is one of the key reasons the Reserve Bank is not ready to lower the cash rate just yet.”

CreditorWatch Consulting chief economist Ivan Colhoun went a step further, saying the RBA’s next move may be upwards.

“It’s hard to see the RBA doing anything other than considering raising interest rates further in the near term if inflation doesn’t moderate,” Mr Colhoun said.

“Today’s data suggests the Bank is over-achieving on its full employment mandate, while the jury is still out on its ability to deliver inflation back to target in a reasonable timeframe.

“I suspect even if (September quarter) inflation moderates, the RBA would not cut interest rates in the near term — before Christmas — as the strength in this data means it does not have to.”

He said the key number would be September’s inflation figure. An underlying pace above 0.9 per cent for the quarter would likely spark a lift to the cash rate, Mr Colhoun said.

But Betashares chief economist David Bassanese said rate cuts would be “delayed not denied”.

He said the strong jobs market would mean the RBA would focus on inflation, rather than worrying about a weak economy.

On Wednesday night, markets had priced in just a 16 per cent chance of a rate cut at the Reserve Bank’s next meeting in November.