By Lucinda Jerogin, Associate Economist at CBA
- The unemployment rate fell to 4.3% in October from 4.5% in September.
- New housing lending surged 9.6% in Q3 25. Tourism and student arrival numbers remain below pre-pandemic levels.
- Our CommBank HSI recorded its eighth consecutive month of gains, lifting by 0.6% in October to be 6.3% higher annually. Other survey data released this week added to the growing evidence we are in a sustained cyclical upturn.
- Offshore, the longest US government shutdown in history came to an end after 43 days. UK data was weak.
- The week ahead will see the release of the Minutes of the November RBA Monetary Policy Board Meeting. Q3 Wage Price Index data is also due.
- Abroad, markets will focus on the FOMC Meeting Minutes to assess the prospect of further rate cuts. Canadian, UK and Japanese CPI are scheduled.
Last week was busy with a steady stream of ABS and survey data releases.
The October Labour Force survey was the clear highlight for financial markets. Employment rose by a stronger than expected 42.2k and the participation rate held steady at 67.0%, taking the unemployment rate down to 4.3% from 4.5% in September.
These seasonally adjusted figures are volatile, and it is important not to over-interpret weakness or strength in a particular month. In trend terms, the labour market has been slowly loosening with the trend unemployment rate having risen from 4.0% in January 2025 to 4.4% in October 2025.
In our view, the rise in the unemployment rate is reflective of both the recent slow-down in non-market jobs growth as well as lingering weakness in the private economy in 2024 and early 2025.
The October print resolves some of the previous tension in the data between high inflation and weak employment. This will likely reaffirm the RBA’s view that the labour market remains ‘a little tight’, solidifying our call that the RBA will keep rates on hold for the foreseeable future.
Indeed, our on-hold RBA expectation was reinforced by a range of events last week.
On Monday, RBA Deputy Governor Hauser struck a more hawkish tone in a speech at the UBS Australasia Conference in Sydney, highlighting the still pressing issue of weak productivity growth in Australia and the associated flow through to the constrained supply capacity of the economy (we wrote on this topic this week as well).
Of note, the Deputy Governor remarked that the board assessed last quarter’s surprise jump in inflation as one third signal and two thirds noise. He also noted “on the basis of that one cut profile in the market path, we’ve predicted inflation would slightly overshoot the mid-point of the target. So, you can draw your own conclusion from that”.
In other data, total international arrivals and departures rose 5.6%/yr and 6.9%/yr in September, respectively. Tourism and student arrival numbers remain below pre-pandemic average levels.
New housing lending increased by 9.6% in Q3 2025 to be 13.2%/yr. The print was much higher than forecast and driven by a solid 17.6%/qtr increase in new investor lending. The RBA has recently flagged a sharp rise of investor activity as a risk to financial stability. Q3 data will likely add to their concern, but we don’t think the threshold for macroprudential policy has been reached.
Survey data added to the growing evidence the Australian economy is in a sustained cyclical upturn. Consumer sentiment surged 12.8% in November, the largest monthly increase outside the pandemic since 1986 and the first positive read (above 100) since early 2022. The print suggests consumers are not overly worried about the RBA’s more hawkish tone. However, the data is volatile, and some unwinding in coming months should be expected.
Business conditions rose to +9pts in October, supported by stronger sales and profitability. Business confidence ticked down slightly but remains above its long-run average.
To roundout the domestic data last week, we released the October edition of our CommBank Household Spending Insights. The CommBank HSI recorded its eighth consecutive month of gains, lifting by 0.6%/mth to sit at a solid 6.3%/yr. The uptick in Q3 25 CPI suggests some of the recent strength was due to prices rather than volumes. Nonetheless, spending momentum since March has been far more consistent than in 2023 or 2024.
Offshore last week, the US government shutdown came to an end after a record 43 days. The resumption of economic data will be critical for markets as it will shed light on the future path of FOMC rate cuts.
The White House flagged that the September jobs report will likely be released next week, but the October report will be delayed and published without the unemployment rate.
Our international economics team expects the data will encourage the FOMC to deliver a 25bp cut in December.
Elsewhere, the unemployment rate in the UK increased to 5.0%, the highest level since early 2021. UK Q3 GDP printed weaker than expected.
The week ahead will see the release of the November RBA Board Meeting Minutes. We will be reading to glean more detail on the Board’s decision to keep rates on hold. That said, Deputy Governor Hauser’s hawkish speech on Monday and the strong labour data yesterday resolves some of the tension in the outlook and the path for rates.
Q3 Wage Price Index data is also due. The WPI tends to be a slow-moving series and based on our internal data we continue to see a gradual softening in wages growth. We expect wages rose by 0.8% in the quarter to be 3.3% higher through the year.
Abroad, markets focus on the FOMC Meeting Minutes to assess the prospect of further rate cuts. Canadian, UK and Japanese CPI are also scheduled.
