Drop in Australia’s official jobless rate ends hope of mortgage interest rate relief

Officially, Australia’s unemployment rate dipped last month from 4.1 percent to 3.9 percent, the Bureau of Statistics (ABS) reported last week. 

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These figures, however, mask the reality of a slowing economy, which would be in recession were it not for government spending. Income per head of population has already fallen for more than 18 months, compounding a near 10 percent drop in working-class living standards since 2021, the biggest fall in decades.

While employment increased by 35,600 last month in seasonally adjusted terms, monthly hours worked fell marginally by 100,000 to 1,965.3 million. This likely indicates that some part-time or casual workers had their hours cut.

Moreover, the bulk of job increases last month were in government-funded industries such as public service, healthcare and education. That is the result of some increases in spending by the Albanese Labor government to try to mask the economic slump and cost-of-living crisis in the lead-up to the next federal election, which must be held before May 17.

Nevertheless, the financial elite immediately declared that the jobless statistics ended any prospect of an early central bank cut to the interest rates that have had a devastating impact on millions of working-class households via huge home mortgage payments and rents. 

Average mortgage payments have risen by 155 percent since May 2022, effectively delivering an historic cut to living conditions, especially to workers and the young people who can no longer afford to buy a home.

“‘Bye-bye’ February rate cut as unemployment rate falls to 3.9pc,” was the headline in Friday’s Australian Financial Review. It reported corporate and bank analysts, such as Betashares chief economist David Bassanese, saying that the Reserve Bank of Australia (RBA) was now likely to delay any rate cuts until later in 2025.

In line with the ruthless logic of the corporate ruling class, they predicted that the RBA board would want to see higher unemployment levels, and greater falls in workers’ real wages, before any move to cut its cash rate of 4.35 percent.