The unemployment rate fell to its lowest level since March, surprising economists and again dampening hopes for an early rate cut. The unemployment rate fell to 3.9% in November, according to the latest data from the Australian Bureau of Statistics, much better than the market forecast of 4.2%. While this is good news for the approximately 36,000 people who found work last month, the fall in unemployment may prevent the Reserve Bank from cutting interest rates in February.
The unemployment rate has fallen below 4%. (Nikki Short/The Sydney Morning Herald) Earlier this week, markets were optimistic about a rate cut in early 2025, thanks to relatively dovish inflation comments from RBA Governor Michelle Bullock. But the surprising jobs data appeared to dampen that optimism. “(This) supports our expectations that the RBA will keep interest rates on hold until at least May,” said Sean Longkirk at Oxford Economics Australia. “With underlying inflation above target and the labour market close to its capacity, the RBA board will be reluctant to cut rates.”