Key Points:

  • Australian employment rose 35,600 people in November, another outstanding result, driving unemployment lower. 
  • Australia’s unemployment rate tumbled to 3.9%, down from 4.1% in October, to be at its lowest level since March. 
  • Growth in hours worked and employment have tracked closely together over the past few years. 

Australian employment rose 35,600 people in November – above market expectations – and the unemployment rate eased to 3.9%. 

Australian employment continues to surge higher, driven by strong job creation across most sectors. Forward-looking indicators of labour demand – such as job vacancies and Indeed job postings – suggest that job creation in the near term will remain strong.

Australian employment increased by 334,500 people over the past year, including by 243,000 over just the past six months. That type of job growth remains remarkable given Australia’s otherwise challenging economy and reflects ongoing strength in non-market industries such as healthcare & social assistance.

Full-time employment increased by 52,600 people in November, offsetting a decline in part-time employment. Full-time employment accounts for 68% of employment gains over the past year, including 86% over the past six months. That indicates that the Australian economy continues to primarily create good-quality, high-paying opportunities.

Bar graph titled “Change in Australian employment”. With a vertical axis ranging from -800,000 to 1,200,000, Australian employment rose by 334,500 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 334,500 people over the past year, remaining high by historical standards.

Australia’s unemployment rate tumbled to 3.9% in November, from 4.1% in October, to be at its lowest level since March. While seasonally adjusted unemployment rates can be volatile month-to-month, it’s notable that the unemployment rate has now deviated considerably from the RBA’s expectations of a 4.3% unemployment rate by year-end.

The RBA won’t update its economic forecasts until the release of the February Statement on Monetary Policy. But we’ve seen some recent deviations, partly regarding GDP and the unemployment rate, that suggest the RBA will be making some pretty big revisions. 

Line graph titled “Australian unemployment rate”. With a vertical axis ranging from 0 to 8%, Australia’s unemployment rate was 3.9% in November, well below the latest Reserve Bank of Australia forecasts.
Line graph titled “Australian unemployment rate”. With a vertical axis ranging from 0 to 8%, Australia’s unemployment rate was 3.9% in November, well below the latest Reserve Bank of Australia forecasts.

Participation in the workforce dipped slightly in November, while the number of hours worked across the economy was unchanged. That’s about the extent of the ‘negatives’ in the latest labour market figures.

Growth in hours worked and employment have tracked pretty similarly throughout the pandemic recovery. Hours worked have increased 11.5% since March 2020, compared to a 12.4% gain for employment. Consequently, average hours worked per person have dipped slightly over that period. 

Line graph titled “Australian unemployment and hours worked”. With a vertical axis ranging from -10 to 15%, aggregate hours worked have increased 11.5% since March 2020 and employment is up 12.4%. 
Line graph titled “Australian unemployment and hours worked”. With a vertical axis ranging from -10 to 15%, aggregate hours worked have increased 11.5% since March 2020 and employment is up 12.4%. 

Assessment and implications

The only downside to Australia’s remarkably strong job market is that any hope of a near-term interest rate cut is over. Economists were split between a February or a May start to the interest rate easing cycle, but the latest job figures suggest that the latter is now more likely than the former. 

Right now, the Australian labour market remains incredibly tight, with forward-looking indicators of labour demand suggesting that won’t change in the near term. The unemployment rate is low, employment growth is strong, and most of those employment gains have been in full-time, well-paying roles. Ongoing job market strength has also helped Australian households absorb cost-of-living pressures and other economic challenges over the past couple of years.