Tucked into the Monetary Policy Board's statement on its September rate rise was a two-word assessment of where the labour market may be heading next. It deserves more attention.

"Broadly stable."

Those two words, applied to leading indicators of the labour market, attracted far less attention than the headline decision on 29 September, when the Reserve Bank's Monetary Policy Board lifted the cash rate target by 25 basis points to 4.60%. The Board's statement said labour market conditions have "eased broadly as expected in recent months", and that leading indicators were "broadly stable".

It is a small phrase, but it carries a specific message about what the RBA expects from the jobs market in the months ahead, and about why it felt able to raise rates despite a rising unemployment rate.

What leading indicators are, and why they matter

Most labour market statistics describe what has already happened. The unemployment rate, employment growth and hours worked tell us about conditions over a recent period. Leading indicators are different: they are measures that tend to move ahead of those outcomes and so offer an early read on the direction of travel.

In general terms, leading labour market indicators typically include measures such as job advertisements, reported vacancies and businesses' hiring intentions. When firms start pulling back on advertising roles or planning fewer hires, that often shows up before any significant rise in unemployment. When those signals steady, it suggests the labour market is not on the brink of a sharp deterioration.

The Board's statement does not list which specific indicators it had in mind, so the phrase is best read as a summary judgement rather than a reference to any single series.

Reading "broadly stable" alongside the rest of the statement

The phrase sits in a particular context. The statement said conditions have "eased broadly as expected in recent months". Put those two assessments together and the picture is of a labour market that has loosened gradually, in line with the RBA's expectations, and whose forward-looking signals are not currently pointing to a faster deterioration.

That matters because the unemployment rate has risen. Governor Michele Bullock said at her media conference that "the unemployment rate has risen from 3.5 per cent over the past couple of years to 4.6 per cent". A week earlier, Monetary Policy Board member Iain Ross AO had cited a rate of 4.5% in July 2026, up from 4.2% a year earlier.

Without the "broadly stable" reading, a rising jobless rate might raise the question of whether the labour market was heading into a sharper downturn. With it, the RBA is signalling that the easing looks orderly rather than accelerating. Bullock also stressed that unemployment remains "still quite low historically", with "over a million jobs created".

Why stability gave the Board room to act

Central banks weigh two broad objectives: keeping inflation low and stable, and supporting employment. When the labour market is weakening quickly, raising rates becomes harder to justify because it could add to job losses. When it is easing gradually and the forward indicators are steady, the balance of risks shifts toward inflation.

That is the balance the Board struck in September. Its statement said "inflation remains elevated" and that "recent inflation outcomes in Australia were stronger than expected at the previous meeting". It noted that "Firms are experiencing cost pressures", that global energy prices are "now much higher" than at the time of the August forecasts, and that there is "pressure on domestic capacity". It also said growth has slowed but remains stronger than expected.

Headline inflation was 4.0% over the year to August on the monthly CPI indicator, and Bullock said underlying inflation has "been about 3.5 per cent for the past six months". Both are above the 2–3% target, whose midpoint is 2.5%.

With the labour market not flashing warning signs of sharp deterioration, the Board judged it could prioritise bringing inflation down. Asked whether a recession was likely, Bullock said: "That is not our central base case at this moment."

A signal that could change

"Broadly stable" is an assessment at a point in time, and the RBA was careful to acknowledge uncertainty. Its statement referred to "heightened uncertainties", noting that the Middle East conflict has "broadened" and remains "unresolved", with scenarios where inflation could be higher and activity lower than forecast.

In such scenarios, leading indicators would be among the first places a change might show up. A decline in hiring intentions or job advertisements, if it were to occur, could signal that the easing in labour market conditions was gathering pace, which would alter the trade-off the Board faces.

The RBA's August Statement on Monetary Policy, published on 11 August when the cash rate was 4.35%, described the labour market as "still ... a little tighter than full employment". That assessment predates the September hike, but it implies that, as of August, the RBA judged the labour market had not yet eased all the way back to full employment, so some further easing would be consistent with its outlook rather than a surprise.

Other signals are also relevant. Bullock noted "there is some evidence that there are more multiple job holders than there used to be", and said "There is no wage price spiral going on in Australia." Both points shape how the RBA interprets labour data alongside its forward-looking gauges.

The bottom line

The phrase "broadly stable" did not make headlines, but it helped explain the September decision. It indicated that the labour market's forward-looking signals were not pointing to a sharp deterioration, even as unemployment has risen from very low levels. That gave the Board scope to focus on inflation, which it described as elevated and stronger than expected.

The Board's guidance is that it "will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed." Between now and the next decision at 2:30 pm AEDT on Tuesday 3 November 2026, whether leading indicators remain steady is one of the quieter but more telling things to watch, alongside the CPI release due on 28 October.