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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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‘America’s big case’: the US Supreme Court raises doubts about Trump’s tariff regime

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Catherine Gascoigne, Macquarie University

The US Supreme Court has heard arguments overnight on the legality of President Donald Trump’s “liberation day” tariffs on most countries around the world.

The number of sceptical questions posed by the justices in the hearings was striking for a court that is dominated by conservative appointees by six to three.

At stake is not only whether the sweeping tariffs will be upheld, but the extent to which the Supreme Court is willing to extend the limits of presidential power.

So, what will the the court have to consider?

Where’s the emergency?

Trump issued these tariffs in April claiming an economic emergency, using the International Emergency Economic Powers Act (IEEPA) of 1977. So, the two primary legal questions for the court to consider are:

  1. whether the IEEPA authorises Trump to issue widespread tariffs; and
  2. if the IEEPA does authorise tariffs, whether it delegates authority to the president in an unconstitutional manner.

These questions have already been considered by three lower US courts, including the United States Court of International Trade. All three courts found that Trump’s tariffs were illegal.

Trump claims his power to impose tariffs is derived from the words “regulate … importation” in the IEEPA. However, justices from both sides of politics expressed scepticism about how much authority that implied. The majority in one of the lower courts described the phrase as “a wafer-thin reed”.

Supreme Court Justice Brett Kavanaugh, a Trump appointee, said:

Figuring out what ‘regulate importation’ means is – is obviously central here […] One problem you have is that presidents since IEEPA have not done this.

Chief Justice John Roberts and Justice Amy Coney Barrett, both conservatives, expressed doubt about that phrase authorising tariffs of the scale of the “liberation day” tariffs. Justice Roberts said:

The justification is being used for a power to impose tariffs on any product from any country for – in any amount for any length of time. […] that’s major authority, and the basis for the claim seems to be a misfit.

Justice Elena Kagan, a Democratic appointee, seemed to sum up the case when she quipped that the IEEPA “has a lot of verbs … It just doesn’t have the one you want”.

In short, whether such an ambiguous phrase could confer such sweeping powers was sharply questioned by justices on both sides of politics.

Discussion of refunds on tariffs already paid

The fact the Supreme Court went on to consider the question of remedies for potentially striking down the tariffs is also a telling sign.

Specifically, Justice Barrett asked how the process for issuing refunds for the potentially illegally collected tariffs would work.

Counsel for the plaintiffs explained the five businesses that brought the action against Trump’s tariffs would be reimbursed first.

As to the imports from the rest of the world, given the case was not a class action, the process would be “a very complicated thing”. As the lawyers for the businesses elaborated on what the refund process might look like, Justice Barrett interjected with the summation: “So, a mess”.

Counsel for the businesses noted there may be legal precedent for the court to limit its decision to “prospective relief”. This means the Supreme Court’s decision would only affect tariffs collected after the court’s judgement, with no effect on tariffs collected before it.

If this legal precedent were to be followed, refunds would not be issued for tariffs collected before the Supreme Court decision (except for the five businesses that brought the case). The court did not pass any comment on the likelihood of following such a precedent.

Regardless of how the refunds might be issued, it is clear they would result in economic and political upheaval, both for the US and exporters from around the world.

Nonetheless, counsel for the businesses noted the Supreme Court had previously said in a case from 1990, “a serious economic dislocation” was not a reason not to do something. In other words, the fact the reimbursement process would be difficult to administer should not be a block to the Supreme Court ruling the tariffs are illegal.

When will the justices rule?

The court agreed to hear the case on an “expedited” basis, but has not set a date for when it will rule. Betting markets were swift to react, though, with traders marking down the chances of the court ruling in Trump’s favour to 30% after the hearing, from nearly 50% before.

Never one for understatement, Trump has said, “I think it’s the most important decision … in the history of our country”.

Despite Trump’s hyperbole, the case currently before the US Supreme Court is not just about the “liberation day” tariffs. It is also about the role of the judiciary in limiting ever-expanding presidential power. This role is so important that it transcends political lines.The Conversation

Catherine Gascoigne, Macquarie Research Fellow in International Economic Law, Macquarie University

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

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Australia is facing an ‘AI divide’, new national survey shows

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Kieran Hegarty, RMIT University; Anthony McCosker, Swinburne University of Technology; Jenny Kennedy, RMIT University; Julian Thomas, RMIT University, and Sharon Parkinson, Swinburne University of Technology

In the short time since OpenAI launched ChatGPT in November 2022, generative artificial intelligence (AI) products have become increasingly ubiquitous and advanced.

These machines aren’t limited to text – they can now generate photos, videos and audio in a way that’s blurring the line between what’s real and what’s not. They’ve also been woven into tools and services many people already use, such as Google Search.

But who is – and isn’t – using this technology in Australia?

Our national survey, released today, provides some answers. The data is the first of its kind. It shows that while almost half of Australians have used generative AI, uptake is uneven across the country. This raises the risk of a new “AI divide” which threatens to deepen existing social and economic inequalities.

A growing divide

The “digital divide” refers to the gap between people or groups who have access to, can afford and make effective use of digital technologies and the internet, and those who cannot. These divides can compound other inequalities, cutting people off from vital services and opportunities.

Because these gaps shape how people engage with new tools, there’s a risk the same patterns will emerge around AI adoption and use.

Concerns about an AI divide – raised by bodies such as the United Nations – are no longer speculative.

International evidence is starting to illustrate a divide in capabilities between and within countries, and across industries.

Who we heard from

Every two years, we use the Australian Internet Usage Survey to find out who uses the internet in Australia, what benefits they get from it, and what barriers exist to using it effectively.

We use these data to develop the Australian Digital Inclusion Index – a long-standing measure of digital inclusion in Australia.

In 2024, more than 5,500 adults across all Australian states and territories responded to questions about whether and how they are using generative AI. This includes a large national sample of First Nations communities, people living in remote and regional locations and those who have never used the internet before.

Other surveys have tracked attitudes towards AI and its use.

But our study is different: it embeds questions about generative AI use inside a long-standing, nationally representative study of digital inclusion that already measures access, affordability and digital ability. These are the core ingredients people need to benefit from being online.

We’re not just asking “who’s trying AI?”. We’re also connecting the use of the technology to the broader conditions that enable or constrain people’s digital lives.

Importantly, unlike other studies of AI use in Australia collected via online surveys, our sample also includes people who don’t use the internet, or who may face barriers to filling out a survey online.

Australia’s AI divide is already taking shape

We found 45.6% of Australians have recently used a generative AI tool. This is slightly higher than rates of use identified in a 2024 Australian study (39%). Looking internationally, it is also slightly higher than usage by adults in the United Kingdom (41%), as identified in a 2024 study by the country’s media regulator.

Among Australian users, text generation is common (82.6%), followed by image generation (41.5%) and code generation (19.9%). But usage isn’t uniform across the population.

For example, younger Australians are more likely to use the technology than their elders. More than two-thirds (69.1%) of 18- to 34-year-olds recently used one of the many available generative AI tools, compared with less than 1 in 6 (15.5%) 65- to 74-year-olds.

Students are also heavy users (78.9%). People with a bachelor’s degree (62.2%) are much more likely to use the technology than those who did not complete high school (20.6%). Those who left school in Year 10 (4.2%) are among the lowest users.

Professionals (67.9%) and managers (52.2%) are also far more likely to use these tools than machinery operators (26.7%) or labourers (31.8%). This suggests use is strongly linked to occupational roles and work contexts.

Among the people who use AI, only 8.6% engage with a chatbot to seek connection. But this figure rises with remoteness. Generative AI users in remote areas are more than twice as likely (19%) as metropolitan users (7.7%) to use AI chatbots for conversation.

Some 13.6% of users are paying for premium or subscription generative AI tools, with 18 to 34-year-olds most likely to pay (17.5%), followed by 45 to 54-year-olds (13.3%).

Also, people who speak a language other than English at home report significantly higher use (58.1%) than English-only speakers (40.5%). This may be associated with improvements in the capabilities of these tools for translation or accessing information in multiple languages.

Bridging the divide

This emerging AI divide presents several risks if it calcifies, including disparities in learning and work, and increased exposure for certain people to scams and misinformation.

There are also risks stemming from overreliance on AI for important decisions, and navigating harms related to persuasive AI companions.

The biggest challenge will be how to support AI literacy and skills across all groups. This isn’t just about job readiness or productivity. People with lower digital literacy and skills may miss out on AI’s benefits and face a higher risk of being misled by deepfakes and AI-powered scams.

These developments can easily dent the confidence of people with lower levels of digital literacy and skills. Concern about harms can see people with limited confidence further withdraw from AI use, restricting their access to important services and opportunities.

Monitoring these patterns over time and responding with practical support will help ensure the benefits of AI are shared widely – not only by the most connected and confident.The Conversation

Kieran Hegarty, Research Fellow, ARC Centre of Excellence for Automated Decision-Making & Society, RMIT University; Anthony McCosker, Professor of Media and Communication, Director, Social Innovation Research Institute, Swinburne University of Technology; Jenny Kennedy, Associate Professor, Media and Communications, RMIT University; Julian Thomas, Distinguished Professor of Media and Communications; Director, ARC Centre of Excellence for Automated Decision-Making and Society, RMIT University, and Sharon Parkinson, Senior Research Fellow, Centre for Urban Transitions, Swinburne University of Technology

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

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Coalition’s primary vote plunges to record low and One Nation surges to record high in Newspoll

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Adrian Beaumont, The University of Melbourne

The Coalition’s primary vote slumped four points to a record low 24% in the latest Newspoll, while One Nation was up four points to a record high 15%. One Nation also surged to 15% in an Essential poll.

The national Newspoll, conducted October 27–30 from a sample of 1,265 voters, gave Labor a 57–43% lead over the Coalition, unchanged from the previous Newspoll in early October.

Primary votes were 36% for Labor (down one point), 24% for the Coalition (down four points), 15% for One Nation (up four points), 11% for the Greens (down one point) and 14% for all others (up two points).

Analyst Kevin Bonham said the poll set or matched a few records:

  • the worst Coalition primary vote ever in a public national poll
  • a tie for the highest One Nation vote in a national poll, matching last week’s Essential poll
  • the lowest combined vote for Labor and the Coalition in Newspoll history.

The Coalition’s previous worst primary vote was 27% in a mid-September Newspoll.

In the new Newspoll, Prime Minister Anthony Albanese’s net approval was down four points to -5, with 51% of voters dissatisfied with his performance and 46% satisfied.

Opposition leader Sussan Ley’s net approval slumped 13 points to -33; she has dropped 24 points since August.

Albanese led Ley by 54–27% as better prime minister, compared to 52–30% in early October.

This is the graph of Albanese’s net approval in Newspoll with a trend line. Labor easily won the 2025 election, despite his ratings being negative at the time.

Australia may be on a trajectory where One Nation overtakes the Coalition to become the main right-wing party. Far-right parties have already overtaken centre-right parties in some European countries.

In the United Kingdom, the Election Maps UK poll aggregate has the far-right Reform party leading with 30.5%, followed by Labour at 19.1%, the Conservatives at 17.5%, the Liberal Democrats at 13.4% and the Greens at 12.6%. With the UK’s first-past-the-post voting system, Reform would win a majority of House of Commons seats on this polling.

Even if One Nation overtakes the Coalition in Australia, the Australian Labor Party has a far higher primary vote than UK Labour. I expect Coalition preferences would favour One Nation, but as long as the combined vote for Labor, the Greens and left-leaning others holds up, One Nation wouldn’t win an Australian election.

Essential poll: One Nation surges to 15%

The national Essential poll, conducted October 22–26 from a sample of 1,041 voters, gave Labor a 50–44% lead over the Coalition by respondent preferences, including undecided voters. Labor’s lead was 51–44% in late September.

Primary votes were 36% for Labor (up one point), 26% for the Coalition (down one point), 15% for One Nation (up two points), 9% for the Greens (down two points), 8% for all others (up one point) and 6% undecided (steady).

By 2025 election preference flows, Labor would lead the Coalition by a more than 55–45% margin.

Albanese’s net approval was up three points in the Essential poll to +1, with 45% of respondents approving of his performance and 44% disapproving. Ley’s net approval was down two points to -11.

On Albanese’s October 20 meeting with US President Donald Trump in Washington, 37% thought it was good for Australia’s long-term interests, 18% bad and 26% said it would have no real impact.

On the direction the Liberals should take to provide an alternative government, 48% of total respondents said they should adopt more progressive positions, 24% more conservative positions and 28% thought they should maintain their current positions. Among only Coalition voters, 49% were in favour of more progressive positions, compared to 29% for more conservative.

Ley was thought best to lead the Liberals by 13% of total respondents, followed by Andrew Hastie and Jacinta Price at 10% each, with 42% unsure. Among only Coalition voters, Ley had 22%, Hastie 20% and Price 13%.

Overall, respondents supported Australia’s target to reach net-zero emissions by 2050 by a 44–27% margin. Among only Coalition voters, this support shrank to 38%, with 35% opposed.

Labor has big lead in NSW DemosAU poll

A New South Wales state poll by DemosAU and Premier National, conducted October 17–22 from a sample of 1,016 voters, gave Labor a 59–41% lead over the Coalition (compared to Labor’s lead of 54.3–45.7% at the March 2023 election).

Primary votes were 37% for Labor, 30% for the Coalition, 13% for the Greens and 20% for all others.

The next NSW election will be in March 2027. Before the May federal election, Labor had been struggling in the NSW polls, but the party has surged since then.

Labor Premier Chris Minns led the Liberals’ Mark Speakman by 44–25% as preferred premier in the poll. Cost of living was rated the most important issue by 36% of respondents, followed by housing affordability on 25%.

Upper house voting intentions were 30% for Labor, 21% for the Coalition, 15% for One Nation, 13% for the Greens, 5% for Family First and 3% each for Animal Justice and Legalise Cannabis.

Half of the 42 upper house seats will be up for election in 2027, using statewide proportional representation with preferences.

Polls of upper house voting intentions are rare in Australia and typically understate major party support. It’s unrealistic for the combined vote for the Coalition and Labor in the upper house to be 16 points below the lower house figure.

Queensland DemosAU poll has solid LNP lead

A Queensland state poll by DemosAU and Premier National, conducted October 13–20 from a sample of 1,006 respondents, gave the Liberal National Party (LNP) a 54–46% lead over Labor, a one-point gain for Labor since a July DemosAU poll.

Primary votes were 37% for the LNP (down three points), 29% for Labor (up one point), 14% for One Nation (up two points), 12% for the Greens (down one point) and 8% for all others (up one point).

LNP Premier David Crisafulli led Labor’s Steven Miles as preferred premier by a 44–32% margin.

On the biggest issue facing Queensland, 30% said lack of affordable housing, 27% cost of living and 20% crime. On the performance of the government on key issues, the LNP had net ratings of -36 on housing and -38 on cost of living, but a much better rating on crime (-2).

A recent Resolve Queensland poll had primary votes that implied a narrow Labor lead after preferences. This DemosAU poll is far better for the LNP.

Midterm elections in Argentina and Trump’s ratings slide

In Argentina’s midterm elections on October 26, far-right President Javier Milei’s Liberty Advances party made decisive gains in both chambers of the legislature, though it still remains short of a majority. I covered these elections for The Poll Bludger.

In the United States, Trump’s net approval rating in analyst Nate Silver’s aggregate of US national polls has dropped to -11.8 (with 54.6% of Americans disapproving of his performance, compared to 42.9% approving). This is down 4.2 points since October 20.

Trump’s falling approval ratings could be linked to the ongoing government shutdown in the US, which began on October 1 and is now poised to become the longest in US history, breaking the 35-day record set during Trump’s first term.

Voters will head to the polls on Tuesday in the US in several key elections, including the governorship in Virginia and New Jersey and the mayoral race in New York City. Democratic front-runner Zohran Mamdani has led independent candidate and former New York Governor Andrew Cuomo in the New York City race, though the polls have tightened in recent days.

I will follow the election results for The Poll Bludger.The Conversation

Adrian Beaumont, Election Analyst (Psephologist) at The Conversation; and Honorary Associate, School of Mathematics and Statistics, The University of Melbourne

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

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