Jobless rate rises to 4.3pc as ASX slides and Middle East war fuels inflation and RBA concerns
The still strong jobs market is giving the Reserve Bank room to lift interest rates in a bid to slow the economy and inflation.
Worries around a sharp economic slowdown amid the spiralling Middle East rose on Thursday, as data showed the jobless rate rose to 4.3 per cent in February, slightly ahead of expectations.
Shares are now tracking for a 7.5 per cent fall, or $180 billion wipeout, since the start of the Iran war, as traders worry about soaring energy prices that prompted the Reserve Bank to lift the cash rate 25 basis points from 3.85 per cent to 4.1 per cent on Tuesday.
At the time, Governor Bullock signalled the strong jobs market gave the central bank room to take rates higher in a bid to slow an economy that added 48,900 jobs in February.
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By continuing you agree to our Terms and Privacy Policy.However, the total number of unemployed people rose 5.6 per cent month on month to 659,100, with the numbers clouded by a higher participation rate from 66.7 per cent to 66.9 per cent and strong levels of immigration increasing the total workforce.
“It’s messy, the headline number for employment was stronger than expected, but part-time employment fell, hours worked fell and unemployment rose, so it all looks a little bit softer,” said Shane Oliver the Chief Economist at AMP.
“The RBA might still say the jobs market is slightly tight, but it suggests a picture of softening at the edges, and of course, now we’ve got the war to worry about.”
Australia’s resilient labour market helped push inflation to 3.8 per cent in the December quarter, with Australia’s Treasurer Jim Chalmers warning price rises could hit the mid-to-high 4 per cent level later this year due to the war in the Middle East.
Other Australian Bureau of Statistics data on Thursday showed total employed people increased to 14.75 million.
However, there are signs of the jobs market weakening over the past weeks as a slew of tech companies have announced large job cuts in Australia as businesses move to replace jobs with technologies linked to advances in artificial intelligence.
Afterpay-owner Block said it would lay off 4000 of 10,000 workers globally, with Sydney-based WiseTech axing 2000 staff and Atlassian shedding 1600 staff.
Benchmark interest rate futures pricing now suggests a peak cash rate of 4.6 per cent in 2026, which means the market expects the RBA to deliver another two 25 basis point rate hikes by November.
Real estate, tech shares fall
The overnight strikes on key oil and gas supply energy in Iran, Qatar and Saudi Arabia sparked a wave of selling on the local share market, with every sector lower except energy.
The real estate sector tumbled 2.5 per cent to take its total fall to 11.1 per cent over the past month as UBS analyst Solomon Zhang warned interest rate increases spell more potential trouble ahead.
“The real estate sector is caught in a challenging macro setup, with the current energy crisis exacerbating existing inflationary pressures, which drove the first RBA hike in February 2026,” Mr Zhang said on Thursday.
Westfield operator Scentre Group lost 2.5 per cent on Thursday and is now down 7.5 per cent in a month, with commercial and industrial property giant Dexus off 2.9 per cent to a 1-month loss of nearly 11 per cent.
Gold stocks also slumped as the precious metal tumbled 5 per cent to $US4883 an ounce overnight. Technology and healthcare companies also saw heavier selling.
The Australian dollar also fell 1 per cent over the past 24 hours to buy US70.2 cents at Thursday lunchtime.
According to its February forecasts put together before the outbreak of the Middle East conflict, Australia’s Reserve Bank does not expect the jobless rate to climb above 4.5 per cent until 2028.
