ABS unemployment rate rises amid signs of slowing jobs market

While 55,000 jobs were added in October, the Australian Bureau of Statistics reported that an additional 27,900 people became unemployed last month as more joined the labour force. The participation rose to a record-equalling 67 per cent.

Of the jobs created, the majority (37,900) were part-time, continuing a recent trend. Commonwealth Bank economist Stephen Wu said that in the past four months part-time employment has grown by 3.9 per cent while full-time work has shrunk by 0.3 per cent over the same period.

October's employment growth is likely to have been driven in part by the hiring of thousands of workers to help run the Voice to Parliament referendum, Mr Wu said, and "some payback" was expected in the November jobs numbers.

But Westpac economist Ryan Wells there was not enough information available to tell if the referendum had delivered a significant employment boost; experience from previous polls suggested the effect was limited.

In further evidence that the demand for workers is easing, the underutilisation rate - which includes the unemployed and those with a job who want to work more hours - increased marginally to 10 per cent, up 0.7 of a percentage point from the same period last year.

Treasury and the Reserve Bank of Australia have forecast the unemployment will rise as the economy slows under pressure from inflation and high interest rates.

But the RBA has trimmed its expectations and predicts the jobless rate will top out at 4.3 per cent in 2025, rather than 4.5 per cent.

As unemployment edges higher the rate of wages growth is predicted to slow.

Wages surged 1.3 per cent in the September quarter, underpinned to a large extent by significant increases in the minimum wage and higher pay for workers in health and aged care.

The RBA expects the wage price index, currently growing at an annual rate of 4 per cent, to stay at this level until mid-next year before slowing to 3.7 per cent by late 2024 and dropping to 3.5 per cent at the end of 2025.

Despite the solid pick up in wages, workers have seen their purchasing power falling because of high inflation.

Living costs are rising by more than 5 per cent, meaning that wages are declining in real terms, and they are not expected to begin overtaking increases in living costs until well into next year.

The Reserve Bank reckons pay gains will start to outpace inflation by mid-2024.

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BDO Economics partner Anders Magnusson said there were signs that the labour market was loosening but the nation's big intake of migrants was helping sustain strong demand for workers.

The nation has added 560,000 people in the past year, most of them coming from overseas, but the employment to population ratio has held steady, "proving the ability of the labour market to absorb this additional labour," Mr Magnusson said.

"Migrants don't just supply labour, but they also add a lot of demand to the economy, which creates jobs."

The October unemployment rate is consistent with Reserve Bank forecasts, but EY senior economist Paula Gadsby warned the result would have the central bank sitting "with one foot hovering above the brake".

KPMG chief economist Brendan Rynne said the employment figures, combined with Wednesday's wages data, was "unlikely to be helpful" for the central bank as it looks for reasons to keep interest rates on hold.

Dr Rynne said inflation data for October due out on November 29 could be crucial.