About 42,000 jobs were added to the economy in October, while the number of unemployed peopled fell by 17,000, the Australian Bureau of Statistics revealed on Thursday.
The unemployment rate fell by 20 basis points, unwinding a commensurate spike the month prior.
"The October unemployment rate is in line with June, July, and August 2025," ABS head of labour statistics Sean Crick said.
The jump in employment exceeded economist forecasts of about 20,000 jobs.
Analysts and the RBA anticipated unemployment to edge down to 4.4 per cent.
In their latest economic forecasts released in November, RBA staff predicted the unemployment rate would remain stable at 4.4 per cent for the foreseeable future.
Several indicators, such as low underemployment, an above-average share of firms struggling to find workers, a high ratio of vacancies to unemployed workers and strong growth in unit labour costs suggested the labour market remained tight, the bank said.
Full time employment rose by 55,000, while part-time employment fell by 13,000.
The participation rate held steady at 67.0 per cent. Â
Despite the fall in unemployment, the trend since the start of 2025 has been one of a distinct gradual softening in labour market conditions.
After inflation was substantially higher than RBA forecasts in the September quarter, today's surprise result lends further weight to the idea that the economy is running near capacity and inflationary pressures are not going away.
How jobs and inflation data continues to unfold will play a crucial role in whether the RBA can afford to cut interest rates again in 2026, or whether it deems conditions too tight to afford any more relief for borrowers.
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