Unemployment in Australia hits a five-year high of 4.7%, making a rates hike less likely

Australia’s unemployment rate has hit a five-year high of 4.7% in September, official figures show.

The last time it was higher was at the end of the COVID lockdowns in October 2021.

Throughout 2026, the seasonally adjusted unemployment rate has increased steadily, up from 4.1% in January.

The warning signs of a slowing labour market are mounting.

A weaker jobs market makes it more likely the Reserve Bank of Australia can wait before moving to raise interest rates again.

After the latest jobs figures came out, market expectations of an interest rate rise in early November fell, from 30% tipping a rate rise to just 18% .

The RBA is set to meet on Melbourne Cup Day to make its next decision on interest rates.

That hard decision will now need to be made with RBA Governor Michele Bullock’s recent warning that unemployment might need to rise further having come to fruition.

What the latest data shows Until last month, the rise in unemployment in 2026 could be explained by more people wanting to work .

But the rise in September in the latest Australian Bureau of Statistics data was entirely due to fewer people being employed.

Employment fell by 39,300 in September.

This was partly offset by a 31,400 fewer people looking for work.

On balance, this meant 8,900 more people were unemployed.

Together, these are classic symptoms of a slowing labour market: less employment and people being discouraged from looking for work.