On one hand, strong employment growth suggests more people are finding work and getting extra hours. On the other hand, it has sharply increased the chance that interest rates could rise again as early as next month, adding further pressure to already stretched household budgets.
New data from the Australian Bureau of Statistics shows the economy added more than 65,000 jobs in December. At the same time, the unemployment rate dropped to 4.1 per cent. For families worried about job security, these numbers are reassuring. A tight labour market generally means more opportunities, greater stability, and better bargaining power for workers.
However, stronger employment also raises concerns about inflation. When businesses struggle to find staff, wages tend to rise, and those higher costs can flow through to prices. Inflation is still above the Reserve Bank of Australia’s target range, and the latest figures have led financial markets to sharply lift expectations of an interest rate increase. The odds of a rate hike next month have jumped to more than 50 per cent.
This is where anxiety sets in for households with mortgages. Many borrowers are still adjusting to the higher interest rates of the past few years. A rise in the cash rate from 3.6 per cent to 3.85 per cent would likely mean higher monthly repayments. This will further squeeze disposable income at a time when grocery bills, energy costs, and insurance premiums remain elevated.
Renters may also feel the impact indirectly. Higher interest rates can discourage new housing construction and keep upward pressure on rents, particularly in cities already facing housing shortages. Even households without debt could feel the effects if businesses pass on higher costs through increased prices.
There is still disagreement among economists about whether a rate rise will actually happen. Some believe the strong jobs data show the economy is running close to its limits and needs higher rates to cool inflation. Others argue the central bank should hold steady, given cost-of-living pressures and the risk of slowing growth too much. For households, this uncertainty makes budgeting and planning harder.
The government has welcomed the employment figures, pointing to them as proof that the economy remains resilient despite global uncertainty. From a household perspective, steady jobs and falling underemployment are positives, especially for younger Australians who are finding it easier to get more hours of work.
At the same time, global events continue to influence local markets. Overseas sharemarket rallies have supported Australian shares, which matters for households with superannuation invested in equities. Stronger markets can boost retirement balances, even as day-to-day living costs remain a concern.
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