Australia unemployment rate hits 4-year high, rate cut back in play

SYDNEY (Reuters) -Australia's unemployment rate spiked unexpectedly to a near four-year high in September as more people went looking for work, a weak result that adds to the case for more policy easing. Investors ramped up bets for a rate cut from the Reserve Bank of Australia in November to 71%, from just 40% before the data. Hopes for more easing had faded as policymakers fret about sticky inflation and a revival in consumer spending. The Australian dollar fell 0.4% to $0.6488, while three-year bond futures rallied 10 ticks to 96.62. The heightened expectations of a rate cut pushed the local stock benchmark to a record high. Figures from the Australian Bureau of Statistics out on Thursday showed net employment rose 14,900 in September from August, when it fell a revised 11,800. That was under market forecasts for a 20,000 gain, while full-time jobs edged up 8,700 after a steep drop the previous month. Annual jobs growth has slowed to just 1.3%, from 3.5% in January. Most crucially, the jobless rate jumped to 4.5%, the highest since November 2021 and against forecasts of a rise to 4.3%, which was the peak forecast by the RBA. The participation rate ticked up to 67.0%, while hours worked rose 0.5%, reversing a drop in August. The RBA held rates steady at 3.60% in September, having cut three times so far this year after assessing the quarterly inflation data. Core inflation had fallen to 2.7% in the second quarter, back in the RBA's target range of 2% to 3%, but recent monthly data pointed to a risk it had not eased further in the third quarter. Governor Michele Bullock said on Thursday that a pickup in consumer spending and higher readings on some parts of inflation had given policymakers pause to consider whether further interest rate cuts were needed. (Reporting by Stella Qiu and Wayne Cole; Editing by Kim Coghill and Sam Holmes)

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