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What a surprise spike in the unemployment rate means for interest rates and the economy

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What a surprise spike in the unemployment rate means for interest rates and the economy

Jeff Borland, The University of Melbourne

The rate of unemployment in Australia is on the rise again. Official labour force data released on Thursday shows that in the month to September, Australia’s seasonally adjusted unemployment rate jumped from 4.3% to 4.5%.

That’s the highest rate since November 2021. The surprise jump strengthens the case for the Reserve Bank of Australia to cut the official cash rate in November.

Back in November last year, the seasonally adjusted rate of unemployment was 3.9%. It has now been above 4% for ten consecutive months, and has only been going in one direction: up.

What could this mean for interest rates?

In its recent decisions, the Reserve Bank’s monetary policy board has jumped at any signs of higher price inflation. But it has retained a favourable outlook on labour market conditions.

In its most recent September decision, the board stated:

labour market conditions have been broadly steady in recent months and remain a little tight.

Such an outlook does not seem an option in light of today’s unemployment numbers.

The Reserve Bank has a full employment mandate to achieve “the maximum level of employment consistent with low and stable inflation”.

The mandate doesn’t put a specific numerical rate on this full employment goal. However, the rate of unemployment is now well above any credible estimate of full employment.

Employment growth is slowing

The reason why the rate of unemployment is rising is not hard to spot. Employment growth is slowing.

In 2024, my calculations based on the official labour force data show an average of 32,600 extra people became employed each month, compared with an extra 33,900 looking for work.

With growth in employment and the labour force relatively balanced, the rate of unemployment remained stable.

So far in 2025, each month only an average of 12,900 extra people have moved into employment.

The number of people looking for work has responded to the weaker labour market conditions, also growing less each month than in 2024, by 22,100 on average.

But unemployment is rising because the increase in the number of people looking for work in 2025 has been much bigger than the increase in employment.

A cooling jobs market

No matter which statistic you look at, my analysis of the official labour force data reveals the signs of a weakening labour market are clear to see.

Monthly hours worked grew on average by 0.27% each month in 2024, but only 0.04% so far in 2025.

In 2024, the total stock of jobs rose by 351,600. In the first six months of 2025, it grew by just 44,100.

And the proportion of people who have jobs, but want to work more hours, has increased from 9.9% to 10.4% since the end of 2024.

Government spending

The reason employment growth is slowing is not what might have been expected – but is even more worrying.

Since about mid-2021, employment growth in Australia has been propped up by a fast pace of job creation in what is known as the non-market sector, which consists of:

  • health care and social assistance
  • education and training
  • public administration and safety.

That growth has come about as the federal government has pushed for improvements in the quality of government services, and expanded the National Disability Insurance Scheme (NDIS) and childcare services.

It has been expected for some time that eventually, the rate of increase in government spending on services would slow. That would in turn cause growth in non-market employment and total employment to slacken.

What’s really driving the trend?

However, that is not what has caused the slower employment growth in 2025.

In fact, today’s data release shows that growth in total hours worked in the non-market sector has continued at pretty much the same pace as in previous years.

Instead, the drop-off in total hours worked has been due to employment in the market sector declining.

Private employers are responding to what they see as weaker economic conditions, by reducing the rate at which they are adding new jobs.

This is a further undeniable sign of a weakening labour market.The Conversation

Jeff Borland, Professor of Economics, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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The trouble with Trump’s Greenland strategy

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Trump’s annexation of Greenland seemed imminent. Now it’s on much shakier ground.

Eric Van Rythoven, Carleton University

Looking at headlines around the world, it seemed like United States President Donald Trump’s annexation of Greenland was imminent. Buoyed by the success of his military operation to oust Venezuelan President Nicolás Maduro, Trump ratcheted up his rhetoric and threatened tariffs on any nation that opposed him.

Adding insult to injury, he openly mocked European leaders by posting their private messages and sharing an AI-generated image of himself raising the American flag over Greenland.

But behind these headlines a different story has emerged that has likely forced Trump to back down on using military force against Greenland and to drop threatened tariffs against Europe.

Trump’s military threats had toxic polling numbers with the American public. His Republican allies openly threatened to revolt. European countries are sending reinforcements to Greenland, hiking the costs of any potential invasion. And Europeans started to contemplate what economic retaliation might look like.

Far from being inevitable, Trump’s Greenland gambit is now on shaky ground.

No good options

Trump has three options to take control of Greenland: diplomacy, money and military force. The latest diplomatic talks collapsed as Greenland and Denmark’s foreign ministers left the White House in “fundamental disagreement” over the future of the territory.

Simply buying the territory is a non-starter. Greenlanders have already said the territory is not for sale, and U.S. Congress is unwilling to foot the bill. That’s left military force, the worst possible option.

It’s difficult to convey in words just how stunningly unpopular this option is with Americans. A recent Ipsos poll found that just four per cent of Americans believe using military force to take Greenland is a good idea.

To put that in perspective, here are some policies that are more popular:

If your official foreign policy is less popular than pardoning drug traffickers, then your foreign policy might be in trouble.

Sensing this unpopularity, Trump has already begun to walk back his military threats. Using his platform at Davos, he claimed “I don’t have to use force. I don’t want to use force. I won’t use force.” He also said he and NATO Secretary General Mark Rutte have “formed the framework of a future deal with respect to Greenland.”

It’s too early to tell whether Trump is being sincere. Not long after claiming to be the “president of peace,” he was invading Venezuela and bombing Iran.

The broader point is that if diplomacy has failed, money is a non-starter, and now military action is ostensibly being taken off the table, then Trump has no good options.

The danger of defections

Trump’s political coalition, in fact, is increasingly fragile and in danger of defections. The Republican House majority has shrunk to a razor-thin margin, and Republicans are already signalling a loud break with Trump over Greenland.

Nebraska congressman Don Bacon recently told USA Today: “There’s so many Republicans mad about this … If he went through with the threats, I think it would be the end of his presidency.”

The situation in the Senate looks even worse. Multiple Republican senators have pledged to oppose any annexation, with Thom Tillis and Lisa Murkowski visiting Copenhagen to reassure the Danish government. With enough defections, U.S. congress could sharply curtail Trump’s plans and force a humiliating climb-down.

There’s yet another danger of defection. Senior military officers can resign, retire or object to the legality of orders to attack America’s NATO allies. Just last year, Adm. Alvin Holsey, the leader of U.S. Southern Command, abruptly retired less than year into what is typically a multi-year posting.

Holsey’s departure came amid reports that he was questioning the legality of U.S. boat strikes in the Caribbean. Americans still have a high level of confidence in the military, so when senior officers suddenly leave, it can set off alarm bells.

Creating a tripwire

In recent days, Denmark and its European allies have rushed to send military reinforcements to Greenland. These forces, however, would have no hope of defeating a committed American invasion. So why are they there?

In strategic studies, we call this a “tripwire force.” The reasoning is that any attack on this force will create strong pressure at home for governments to respond. If Danes and Swedes — and other Europeans for that matter — saw their soldiers being captured or killed, it would force their governments to escalate the conflict and retaliate against the United States.

The Trump administration would like to seize Greenland, face no European forces and suffer no consequences. But the entire point of a tripwire force is to deny easy wins and to signal that any attack would be met with costly escalation. It creates a price to invading Greenland for an administration that rarely wants to pay for anything.

The B-word

Amid the Trump administration’s economic and sovereignty threats, people are forced to grapple with what comes next. European governments are already quietly debating retaliation, including diplomatic, military and economic responses.

Chief among these is the European Union’s Anti-Coercion Instrument, colloquially known as the “trade bazooka,” that could significantly curb America’s access to the EU market.

But for ordinary Europeans, a different B-word will come to mind: boycott.

Some Europeans began boycotting U.S. goods last year amid Trump’s trade threats — but never to the same level as Canadians. That could quickly change if the U.S. engages in a stunning betrayal of its European allies. Fresh anger and outrage could see Europeans follow Canada’s lead.

Trump repeatedly threatened Canada with annexation, and it triggered a transformation of Canadian consumer habits. Canadians travel to the U.S. less, buy less American food and alcohol and look for more home-grown alternatives. Despite Canada’s small population, these boycotts have caused pain for U.S. industries.

Now imagine a similar scenario with the EU. In 2024, the U.S. exported almost US$665 billion in goods and services to the EU. It’s one of the largest export markets for the U.S., fuelling thousands of jobs and businesses.

The real danger for American companies, however, is when consumer pressure moves upwards to governments and corporations. European governments and corporations who buy from American giants like Microsoft, Google and Boeing will start to see public pressure to buy European — or at least not American. America’s most valuable corporate brands risk being contaminated by the stigma of the U.S. government.

Will he, won’t he?

None of this will stop the Trump administration from trying. Trump’s own words — that there is “no going back” on his plans for Greenland — ensure he’s backed himself into corner.

The more likely scenario seems to be starting to play out — Trump will try and then fail. His threats to annex Greenland will likely be remembered next to “90 trade deals in 90 days” and “repeal and place” in the pantheon of failed Trump policies.

The tragedy here is not simply a Trump administration with desires that consistently exceeds its grasp. It’s that the stain of betraying America’s closest allies will linger long after this administration is gone.The Conversation

Eric Van Rythoven, Instructor in Political Science, Carleton University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Market Watch: Greenland deals, Japan bonds & Australia jobs

Join David Scutt as we dissect fast-moving global markets and key insights from Greenland to Japan and Australia.

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Join David Scutt as we dissect fast-moving global markets and key insights from Greenland to Japan and Australia.


From Greenland to global bonds, and right here at home in Australia, markets are moving fast—and we break down what it all means for investors.

David Scutt from StoneX joins us to give expert insights on the key risks and opportunities shaping the week.

First, the U.S. is back in Greenland with its “Sell America 2.0” strategy. We explore the geopolitical wins, the potential economic gains, and the hurdles that could derail this ambitious plan.

Then, Japan’s bond market meltdown has shaken global investors. Scutt explains what triggered the rout, whether it’s over, and the implications for markets across Asia and the US.

Finally, Australia’s December jobs report is more than just numbers—it’s a critical piece of the RBA rates puzzle. We break down the scenarios and what a surprise result could mean for the economy and local markets.

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#MarketWatch #GlobalMarkets #GreenlandDeals #JapanBonds #AustraliaJobs #RBA #DavidScutt #TickerNews


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Backlash over AI “Indigenous Host” sparks ethical debate

AI-generated “Indigenous host” sparks controversy, raising ethical concerns about representation and authenticity in social media.

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AI-generated “Indigenous host” sparks controversy, raising ethical concerns about representation and authenticity in social media.


A viral social media account featuring an AI-generated “Indigenous host” is drawing criticism from advocates and creators alike, raising questions about authenticity, representation, and ethics in the age of artificial intelligence. Critics argue that AI characters can displace real Indigenous voices and mislead audiences.

Dr Karen Sutherland from Uni SC discusses how AI is reshaping identity on social media and why the backlash over this account has ignited a wider conversation about “digital blackface” and the ethics of AI-generated personalities. She explores the fine line between education, entertainment, and exploitation.

The discussion also dives into monetisation, platform responsibility, and the broader risks AI poses to media and cultural representation. As AI becomes increasingly sophisticated, audiences and creators alike must consider what authenticity truly means online.

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#AIControversy #IndigenousVoices #DigitalBlackface #SocialMediaEthics #AIIdentity #OnlineBacklash #MediaEthics #RepresentationMatters


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