WA’s jobless rate falls dramatically in November amid ‘blockbuster’ national data that trims hope of rate cut

Hopes of a February interest rate cut have taken a dent after WA helped power a shock fall in national unemployment.

Australia’s jobless rate fell from 4.1 per cent to 3.9 per cent in November, a “blockbuster” performance that beat expectations and came despite weak economic growth.

WA posted an extraordinary 0.8 percentage point decline in unemployment to 3.3 per cent, according to the Australian Bureau of Statistics. That was the State’s sixth-biggest monthly fall in the past two decades.

The remarkable national performance prompted investors to tone down anticipation that the Reserve Bank would lower interest rates in February.

Markets were forecasting a roughly 50-50 chance of a cut at that meeting — down from about three-in-four a day earlier — according to Bloomberg on Thursday.

Yet there were plenty of jobs on offer for Australians as the employment boom of 2024 delivered another solid month.

Nearly 36,000 roles were created in November as a higher-than-usual number of unemployed people were hired.

Surging population, a rising share of people wanting to work, and government spending have also been key factors through the year.

“That was unexpected,” Moody’s Analytics head of Australian economics Harry Murphy Cruise said.

“The bulletproof labour market remains a thorn in the side of the RBA.

“With unemployment refusing to heel to the RBA’s hikes, there is a risk the economy stays hotter than needed to bring down underlying inflation.”

It means quarterly price data due in January will be crucial to decide the central bank’s next move.

The Reserve has wanted to fight inflation without sparking widespread job losses. November’s figures show that “narrow path” is still live.

But smoking hot employment also indicates a strong level of spending across the economy, which will put upward pressure on prices.

Governor Michele Bullock’s central bank wants to rein that in.

“These tight labour market conditions make it tougher to achieve low and stable inflation,” EY chief economist Paula Gadsby said.

“The Australian labour market continues to operate at a level above full employment, and while productivity growth remains weak, the Reserve Bank will remain alert.”

ANZ said the jobs numbers would “offset” soft recent economic growth data when the RBA decided its next move; while Betashares chief economist David Bassanese said the “blockbuster” report would likely push back an interest rate cut, tipping May.

Yet Mr Bassanese said low unemployment should not stop the RBA making a move if inflation kept falling.

WA put in a powerhouse performance which also highlighted the volatility in the data — because the State had posted a big lift in unemployment only one month prior.

Treasurer Rita Saffioti said “the strength of our job market has been incredible”.

“It’s great to see another 15,300 people find work in November, with a record of more than 1.63 million Western Australians now employed,” Ms Saffioti said.

“Despite the national economy experiencing headwinds from higher interest rates, the WA economy continues to outperform, with unemployment at 3.3 per cent, the lowest of the States.”

She said the jobless rate had been at or below 4 per cent for 37 of the past 38 months.

“WA has the strongest economy in the nation, and keeping it that way will continue to be our top priority, so all Western Australians can have quality, local jobs.”

The latest figures come just two days after the Reserve Bank held official interest rates at 4.35 per cent and signalled rate reliefJU would be strongly considered next year.

The central bank binned its long-repeated warning that it might move either way on interest rates, and Ms Bullock said the board had seen recent growth data as soft.

But fighting inflation remained top priority.

“We’re not saying that we’ve won the battle against inflation yet,” Ms Bullock said on Tuesday. “We’re saying we’ve got a little bit more confidence that things are evolving as (predicted) in our forecasts.”