Key Points

  • Australian employment rose strongly, up 47,500 people in August, consolidating recent stellar growth. 
  • Australia’s unemployment rate remained unchanged at 4.2% but has also increased by 0.5 percentage points over the past year.
  • Australia’s participation rate reached a record high of 67.1%, likely driven by cost-of-living pressures. 

Australian employment rose by 47,500 people in August – above market expectations – while the unemployment rate remained at 4.2%. The unemployment rate is tracking in line with the latest forecasts from the Reserve Bank of Australia.

Australia’s unemployment rate is up 0.5 percentage points over the past year and that’s a considerable increase over a short period of time. That this has occurred while Australian employment jumped 374,200 people highlights some of the risks surrounding the Australian job market. If employment growth eases then high population growth could trigger a big jump in the unemployment rate.

Line graph titled “Australian unemployment rate”. With a vertical axis ranging from 0 to 8%, Australia’s unemployment rate was unchanged at 4.2% in August.
Line graph titled “Australian unemployment rate”. With a vertical axis ranging from 0 to 8%, Australia’s unemployment rate was unchanged at 4.2% in August.

Part-time employment drives gains in August

Employment gains in August were concentrated in part-time roles (+50,600 people), compared to a modest decline in full-time employment. That decline, however, shouldn’t be viewed in a negative light given that full-time employment accounts for more than three-quarters of Australian employment gains this year. This is an economy that is still creating a lot of quality high-paying jobs.

Overall, Australian employment increased by 374,200 people over the past year, which remains well above pre-pandemic trends. That’s been driven by strong job creation, as seen on Indeed, which remains elevated despite an otherwise challenging economic environment.

Bar graph titled “Change in Australian employment”. With a vertical axis ranging from -800,000 to 1,200,000, Australian employment rose by 374,200 people over the past year, remaining high by historical standards. 
Bar graph titled “Change in Australian employment”. With a vertical axis ranging from -800,000 to 1,200,000, Australian employment rose by 374,200 people over the past year, remaining high by historical standards. 

Australia’s participation rate reaches new high

Australia’s participation rate increased further in August, reaching a new record high, which is impressive given that Australia’s ageing population continues to place downward pressure on workforce participation. Plenty of job opportunities, the nation’s cost-of-living crisis and older workers remaining in the workforce for longer has offset the impact of demographic factors on workforce participation.

Whether rising participation in the workforce is a positive or negative economic development depends largely on what drives it. In recent decades, rising participation among women has reflected a more inclusive working environment and greater emphasis on work-life balance. Whereas the recent increase, perhaps due to cost-of-living pressures, perhaps reflects concerns around a person or household’s financial livelihood. 

Line graph titled “Australian labour force participation rate”. With a vertical axis ranging from  60 to 68%, Australia’s participation rate reached a record high of 67.1% in August and is well above pre-pandemic levels.
Line graph titled “Australian labour force participation rate”. With a vertical axis ranging from  60 to 68%, Australia’s participation rate reached a record high of 67.1% in August and is well above pre-pandemic levels.

Assessment and implications

Australia’s labour market remains tight and is proving highly resilient. The unemployment rate is low, employment growth is strong and forward-looking measures of labour demand remain solid. Australia’s strong jobs market would give the RBA confidence that the nation is relatively well placed to absorb further rate hikes, if necessary. 

In the coming months, labour market measures will play a pivotal role in determining the direction of monetary policy, with the RBA looking for any significant deviation from forecasts to solidify their next move.