Key points:

  • Australian employment fell slightly in May, following strong gains in the previous two months. 
  • Australia’s unemployment rate (4.1%), underemployment rate (5.9%) and underutilisation rate (9.9%) are still all low by historical standards. 
  • The Reserve Bank of Australia is set to cut interest rates once again when they meet in July.

Australian employment fell 2,500 people in May – below market expectations – while the unemployment rate remained steady at 4.1%. The small drop in employment may seem concerning, but it follows a cumulative gain of around 113,000 in March and April.

Over the past year, Australian employment has increased by 329,100 people, outpacing growth in the working-age population. Notably, around three-quarters of those gains were in full-time roles. That’s helped to keep the unemployment rate low, supporting Australian households throughout an otherwise difficult economic period.

Bar graph titled “Change in Australian employment” shows the annual change in employment for full-time, part-time, and total jobs from 2019 through 2025. With a vertical axis ranging from -800,000 to 1,200,000, Australian employment rose by 329,100 people over the past year.
Bar graph titled “Change in Australian employment” shows the annual change in employment for full-time, part-time, and total jobs from 2019 through 2025. With a vertical axis ranging from -800,000 to 1,200,000, Australian employment rose by 329,100 people over the past year.

Forward-looking measures of labour demand, such as Indeed job postings, remain healthy. Employers across the country continue to advertise widely, which should translate into strong employment gains in the near term. However, in an uncertain economic and geopolitical environment, hiring plans can always change quickly.

Line graph titled “Australian job postings on Indeed.” With a vertical axis ranging from 0 to 250, indexed so that 1 February 2020 = 100, Australian job postings were 51% above their pre-pandemic baseline on 13 June 2025.  
Line graph titled “Australian job postings on Indeed.” With a vertical axis ranging from 0 to 250, indexed so that 1 February 2020 = 100, Australian job postings were 51% above their pre-pandemic baseline on 13 June 2025.  

Broader labour market metrics also point to ongoing tightness. In May, the underemployment rate ticked lower to 5.9% – the second lowest result in the past 15 years. Australia’s underutilisation rate dipped back below 10%. 

Line graph titled “Australian unemployment measures.” With a vertical axis ranging from 0 to 25%, Australian unemployment measures remain low, with the unemployment rate (4.1%), the underemployment rate (5.9%) and the underutilisation rate (9.9%) all low by historical standards. 
Line graph titled “Australian unemployment measures.” With a vertical axis ranging from 0 to 25%, Australian unemployment measures remain low, with the unemployment rate (4.1%), the underemployment rate (5.9%) and the underutilisation rate (9.9%) all low by historical standards. 

While the participation rate dipped slightly to 67% in May, it is still up 0.3 percentage points over the past year. It means that Australia’s labour market is more diverse in terms of age, gender and ethnicity than it used to be.

Line graph titled “Australian labour force participation rate” shows both the seasonally adjusted and the trend share of the working-age population (%). With a vertical axis ranging from 60 to 68%, Australia’s participation rate was 67% in May, up 0.3 percentage points over the past year.
Line graph titled “Australian labour force participation rate” shows both the seasonally adjusted and the trend share of the working-age population (%). With a vertical axis ranging from 60 to 68%, Australia’s participation rate was 67% in May, up 0.3 percentage points over the past year.

Assessment and implications

Despite recent global turbulence, Australia’s job market remains resilient.  Whether the economy has been strong or weak, nothing has derailed Australia’s post-pandemic job boom. 

The Reserve Bank of Australia is widely expected to cut the cash rate again when they meet in July, following earlier cuts in February and May. Markets are pricing a nearly 80% chance of a rate cut in July. While the impact on the job market may not be immediate – given changes in monetary policy impact the economy with a significant lag – it may provide crucial support next year.