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Australia’s unemployment rate dropped to 4.3% in October as the labor market added more than 40,000 jobs, defying expectations of continued weakness and providing fresh evidence of economic resilience amid ongoing cost-of-living pressures.
The seasonally adjusted unemployment rate fell from 4.5% in September, returning to levels last seen in the middle of the year, according to data released Thursday by the Australian Bureau of Statistics. The decline came as employment rose by 42,000 people and the number of unemployed fell by 17,000.
“The unemployment rate dropped to 4.3% after rising to 4.5% in September,” said Sean Crick, the ABS head of labour statistics. “The October unemployment rate is in line with June, July, and August 2025.”
The figures represent a significant turnaround from September’s weaker performance and suggest the Australian economy continues to generate jobs despite elevated interest rates and sluggish consumer spending. The data will be closely scrutinized by the Reserve Bank of Australia as it weighs monetary policy decisions in coming months.
Full-time employment drove the gains, rising by 55,000 positions in October. Female full-time employment increased by 29,000, while male full-time employment rose by 26,000. The surge in permanent positions contrasts sharply with part-time work, which fell by 13,000 people during the month.
“This month more unemployed people moved into employment compared to a typical October,” Crick said, suggesting the movement represents genuine labor market strength rather than seasonal variation.
The decline in part-time work was driven almost entirely by female workers, with female part-time employment falling by 21,000 people. Male part-time employment partly offset this decline, rising by 8,000 positions.
The divergence raises questions about workforce dynamics and access to flexible employment arrangements, particularly for women who may be balancing caregiving responsibilities with paid work. While the overall shift toward full-time employment could signal greater job security for many workers, the sharp drop in female part-time positions may reflect reduced availability of flexible roles or changing employer preferences.
The participation rate, which measures the proportion of the working-age population either employed or actively seeking work, remained steady at 67.0% in October. However, the gender breakdown showed contrasting movements, with male participation rising 0.2 percentage points to 71.0% while female participation fell 0.2 percentage points to 63.1%.
The employment-to-population ratio, another key measure of labor market health, held at 64.0% for the month. Hours worked rose by 0.5% in October, outpacing the 0.3% increase in employment and indicating that workers are not only finding jobs but also securing more hours.
Beyond the headline unemployment figure, broader measures of labor market slack showed continued improvement. The underemployment rate, which captures workers who have jobs but want additional hours, fell 0.2 percentage points to 5.7% in October.
The October underemployment rate stood 0.5 percentage points lower than the same period last year and 3.0 percentage points below the level recorded in March 2020, when the COVID-19 pandemic first disrupted Australian labor markets.
The underutilization rate, which combines unemployment and underemployment to provide a comprehensive picture of unused labor capacity, fell 0.3 percentage points to 10.0%. This marked a 0.3 percentage point decline from October 2024 and a 3.9 percentage point drop from March 2020 levels.
The declining underemployment suggests that workers are finding it easier to secure the hours they desire, potentially supporting household incomes and consumer spending. However, the persistence of any underutilization indicates some slack remains in the labor market.
Looking beyond monthly volatility, trend employment data revealed sustained growth. Trend employment, which smooths short-term fluctuations, grew by approximately 27,000 people, or 0.2%, from September to October. Over the past 12 months, trend employment expanded 1.5%.
Monthly hours worked in trend terms rose 0.1%, slightly below the 0.2% increase in employment. Annual growth in hours worked stood at 1.4% in October, marginally lower than the 1.5% rise in employment over the same period.
In trend terms, the participation rate rose marginally to 67.0% in October, while the employment-to-population ratio remained at 64.0%. The trend underemployment rate held at 5.8%, and the trend underutilization rate stayed steady at 10.1%.
The stronger-than-expected labor market data complicates the outlook for monetary policy and economic management. The Reserve Bank of Australia has maintained its cash rate at elevated levels as it seeks to bring inflation back to its target range without triggering a sharp economic downturn.
A resilient labor market with falling unemployment could support consumer spending and maintain wage pressures, potentially delaying any decision to reduce interest rates. However, the central bank must also consider broader economic indicators, including weak productivity growth and subdued retail spending.
Economists have offered varying interpretations of the October data. Some view the employment gains as evidence that higher interest rates are not severely damaging the economy’s capacity to generate jobs. Others caution that monthly labor force data can be volatile and that a single month’s improvement may not indicate a sustained trend.
The data arrives as Australian households continue to grapple with cost-of-living pressures, including elevated mortgage payments, higher rents, and increased prices for essential goods and services. While job security remains strong for most workers, real wage growth has lagged inflation for much of the past two years, eroding purchasing power.
The ABS will release more detailed regional labor market data in the October 2025 issue of Labour Force, Australia, Detailed, scheduled for publication on Thursday, November 20. Those figures will provide insights into which states, territories, and industries are driving employment growth.
Regional variations often reveal significant differences in labor market conditions across Australia’s diverse economy. States with stronger housing construction, mining activity, or population growth typically show more robust employment gains, while regions dependent on struggling sectors may face weaker conditions.
The October survey captured data from the period between September 28 and October 11, 2025. The November survey, which will provide the next update on labor market conditions, covers the period from October 26 to November 8.
Australia’s current unemployment rate of 4.3% remains historically low by international standards. Many developed economies have experienced higher unemployment rates as they navigate post-pandemic labor market adjustments and monetary policy tightening.
The Australian labor market’s resilience partly reflects structural factors, including strong population growth driven by immigration, robust demand for workers in services sectors, and government policies supporting employment. However, questions persist about the sustainability of low unemployment if economic growth continues to slow.
The October data showed that Australia’s labor market continues to absorb workers even as the economy faces headwinds. Whether this strength can be maintained through the summer months and into 2026 will depend on various factors, including consumer confidence, business investment, global economic conditions, and the path of interest rates.
For now, the October figures provide policymakers, businesses, and workers with evidence that Australia’s labor market retains considerable momentum. The challenge ahead lies in maintaining this strength while addressing persistent inflation and cost-of-living challenges that continue to affect households across the country.
The ABS thanked all individuals and organizations that participated in and supported the October labour force survey, which provides crucial data for economic decision-making and policy formation..
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