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Australia’s Unemployment Rate Drops to 4.3%
In October, Australia’s unemployment rate decreased to 4.3%, down from 4.5% in September, outperforming expectations of 4.4%. This decrease is attributed to a significant rise in employment, with 42,000 jobs added, far exceeding the forecast of 20,000. Notably, this represents the highest monthly growth recorded in the second half of 2025.
Key Insights from the October Employment Report
The Australian Bureau of Statistics (ABS) provided several pivotal points in their jobs report for October:
- Strong Labour Market Movement: "More unemployed individuals transitioned into employment this October compared to what is typically expected," noted Sean Crick, ABS Head of Labour Statistics.
- Steady Participation Rate: The participation rate remained stable at 67%, consistent with figures from the past year.
- Annual Employment Growth: Employment growth on an annual basis accelerated to 1.6%, up from 1.3% in September.
- Reduction in Underutilisation Rate: The underutilisation rate, which accounts for the unemployed and those wanting more hours, fell by 0.3 percentage points to 10.0%.
ASX 200 Declines Following Jobs Data
Upon the release of the positive employment figures at 11:30 am AEDT, the S&P/ASX 200 index initially fell by approximately 0.2%. However, it quickly worsened, with a decline of as much as 1.01% by 11:47 am.
ASX 200 intraday chart, Thursday 13 November | Source: TradingView
The unexpected robust jobs data prompted a rise in bond yields, with the Australian Government’s 10-year yield increasing by 5 basis points to 4.43%—the highest level since May.
Australian Government 10-year yield chart | Source: TradingView
This spike in yields led to a selloff in yield-sensitive sectors, with the S&P/ASX 200 Real Estate Index experiencing a 3.1% drop, reaching a near five-month low. A majority of sectors were in the red, with the exception of Materials.
Economic Analysts Weigh In
AMP economist My Bui adopted a cautious perspective: "The unemployment rate’s drop to 4.34% is marginally below our forecast. However, we believe the overarching trend remains intact. The labour market continues to ease, albeit gradually, with expectations of the unemployment rate ticking up to 4.6%."
Conversely, RBC Capital Markets’ chief economist Su-Lin Ong took a more assertive stance: "The stronger-than-expected labour force data will likely keep the Reserve Bank of Australia (RBA) on the sidelines, indicating that relatively restrictive policy settings are appropriate."
Ong expressed doubt regarding near-term rate cuts from the RBA, stating the prevailing conditions do not support such moves, particularly given the alignment of current unemployment rates with the RBA’s latest monetary policy forecasts.
ASX 200 Divergence from US Markets
Currently, the ASX 200 has decreased by 4.1% from its record high on 21 October, hitting a new three-month low, contrasting sharply with positive trends in the US markets. The Dow experienced a second consecutive record high overnight, with other major indices including the S&P 500, Nasdaq, and Russell 2000 remaining within 2-3% of their all-time highs.
Despite the local market’s downturn, there are positive trends to note; the S&P/ASX 200 Materials Index has seen an impressive four-day winning streak, climbing 4.9% and nearing all-time highs. This upward movement reflects strong performance across various commodities, including gold, copper, and lithium.
In summary, despite the overall downturn in the ASX 200, the employment figures reveal a resilient labour market, while shifts in bond yields reflect evolving economic sentiments about future monetary policy.
