The unemployment rate was unchanged in October at 4.1 percent, with employment growth slowing to 16,000, according to data from the Australian Bureau of Statistics (ABS).

While the consensus was for an unemployment rate of 4.1 percent, employment was expected to peak at around 25,200.

The unemployment rate averaged 4.1% as of April 2024. – briefly reached 4.2% in July 2024.

Commenting on the figures, HSBC's Paul Bloxham noted that the unemployment rate had remained stable at its current level for the past seven months, suggesting that the loosening of the labor market may have stopped.

“The unemployment rate remains low and stable, other indicators of spare capacity are trailing, employment growth is positive and the participation rate remains high. If easing has indeed stalled, it increases the risk that the RBA will not be able to cut its interest rate,” Bloxham said.

"In short, the labor market is still at or slightly above 'full employment' and does not appear to be easing further at this stage."

He opined that unless the labor market loosens further, rate cuts may not happen at all.

Krishna Bhimavarapu, APAC economist at State Street Global Advisors, agreed that the current level of unemployment does not support a rate cut in the near term.

"Since the RBA has lowered its GDP forecasts recently, it signals that the bank is comfortable staying restrictive for an extended period," Bhimavarapu said.

Similarly, VanEck portfolio manager Cameron McCormack said the latest data gave the RBA little incentive to move its timetable for rate easing.

“Strength in the labor market continues to exert upward pressure on already elevated services inflation, hampering progress in reducing inflation to the RBA's 2-3 per cent target range. This reinforces our view that a rate cut is unlikely until the end of next year," McCormack said.

The market is currently predicting the first cut for August 2025.

Until the last printing of the Consumer Price Index (CPI), the CBA was forecasting a rate cut before Christmas. While the bank's updated forecast now expects a cut in February, Belinda Allen noted on Thursday that for that to happen the RBA would likely need to see a further rise in the unemployment rate of 4.1 per cent, along with a moderation in the reduced average CPI.

“For the unemployment rate to average 4.3 percent in Q4 24 [assuming an unchanged participation rate]employment growth will need to average just under 15k over the next two months,” she said.

CBA partner NAB on Thursday became the first big four bank to push back its rate cut forecast until May 2025. On the back of the unemployment print, NAB said: “Inflation data shows some ongoing pressure on components sensitive to domestic demand and labor costs.

"Combined with the resilience evident in the latest labor market data, we think the RBA would have to worry about a sharper weakening in the labor market to decide to cut immediately in February, with May more likely." "