National

RBA head thinks job market tightness 'close to balance'

By AAP Newswire

Oct 16, 2025

CBD workers — Labour figures are among major sets of data the Reserve Bank will examine for its next rates call. -AAP Image

Australia's central bank believes the recent tightness in the domestic labour market is fading, as it continues to monitor key indicators to guide its interest rate deliberations.

Hold tight - we’re checking permissions before loading more content

Labour force figures for September will be released on Thursday by the Australian Bureau of Statistics, with economists tipping the unemployment rate to remain steady.

The jobless rate held at 4.2 per cent in August despite employment falling by 5000 people for the month.

CommSec chief economist Ryan Felsman said a result with stable unemployment was on the cards, but a jump could change the forecasts for an interest rate cut in early November when the Reserve Bank next meets.

"We expect employment to print at 30,000 and the unemployment rate to remain steady at 4.2 per cent with a slight increase in the participation rate to 66.9 per cent," he said.

"A material lift in the labour market remains the key near-term risk to further easing."

When asked about the state of the jobs market Reserve Bank Governor Michele Bullock said employment was a little bit "tight", which generally means there are more jobs than available workers.

However, it's also close to balance, she told the Nomura Research Forum in Washington DC on Thursday Australian time, while pointing to an ongoing moderation in inflationary pressures in the local economy.

"At the moment we are probably close to balance in terms of the output gap (in the economy) ... and ultimately what inflation tells you is whether or not you've got an output gap," she said.

"Employment, we think, is marginally a little bit tight.

"But we look at a lot of different indicators of the labour market, so those two things (inflation and employment) suggest to us that maybe it's a little tight but it's close to balance," she said.

Minutes from the Reserve Bank's September meeting, when it decided to keep the official cash rate on hold at 3.6 per cent, said labour force figures were factored into its decision.

The bank's board said labour market conditions remained tight, though there was uncertainty about the forecast.

"The underemployment rate had edged lower while other measures of labour underutilisation had been broadly stable," the minutes said.

"Business survey and liaison suggested that availability of labour has changed.

"While some easing in employment growth had been forecast in August as population growth slowed, the employment-to-population ratio and participation rate had also edged lower, but remained close to historical highs."