Key Points:

  • Australian employment growth has stalled over the past three months, up by just 6,500 people. 
  • Australia’s unemployment rate remains low at 4.1%, while the labour force participation rate has tumbled since reaching a record high in January. 
  • Forward-looking measures of labour demand, such as Indeed job postings, remain healthy even though they have declined over the past year. 

While Australian employment rose 32,200 people in March — normally a healthy figure — it followed a decline of 57,500 people in February. Australia’s job market has started the year in a sluggish fashion, with employment up just 6,500 people over the first three months. That’s a fair departure from last year when the job market was regularly adding 100,000 people or more a quarter. 

Australian employment increased by 308,000 people over the past year, but just 96,600 people over the past six months. A little over half of annual employment growth was driven by full-time employment.

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 308,000 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 308,000 people over the past year.

Given that, it’s perhaps surprising that Australia’s unemployment rate hasn’t increased more. The reason, however, is quite simple: Australia’s participation rate has declined by 0.5 percentage points over the past two months, effectively absorbing the impact of low employment growth. 

If the participation rate had held steady at its record high from January, Australia’s unemployment rate would have jumped to 4.7% — a far cry from the 4.1% official rate. 

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 66.8% in February, down 0.5 percentage points since its record high in January.
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 66.8% in February, down 0.5 percentage points since its record high in January.

The slowdown in employment growth is somewhat at odds with ongoing strength in forward-looking indicators of labour demand, such as job vacancies or job advertisements. Employers continue to report higher-than-normal vacancies that need to be filled, with Indeed’s job postings index for Australia still 52% above its pre-pandemic baseline through early April. 

Line graph titled “Australian job postings on Indeed.” With a vertical axis ranging from 0 to 250, indexed so that 1 Feb 2020 = 100, Australian job postings were 52% above their pre-pandemic baseline on 11 April 2025. 
Line graph titled “Australian job postings on Indeed.” With a vertical axis ranging from 0 to 250, indexed so that 1 Feb 2020 = 100, Australian job postings were 52% above their pre-pandemic baseline on 11 April 2025. 

Most labour market metrics, though, remain quite healthy, with some even improving. Australia’s underemployment rate — the share of Australians with a job who would prefer more hours — fell to its lowest level since August 2008. Australian workers are increasingly able to find the hours they need, critical when faced with cost-of-living pressures.

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. 

Assessment and implications

Australia’s economic landscape has changed considerably in recent weeks. Carnage in financial markets, high levels of economic and geopolitical uncertainty and a suddenly weaker economic outlook will all weigh heavily on labour market conditions this year. 

That said, conditions had already softened slightly over the first three months of the year, with employment growing modestly compared to strong gains last year. Forward-looking measures of labour demand remain healthy, but that could change quickly if global growth deteriorates.

The global economic environment has shifted in such a fashion that the Reserve Bank of Australia is now likely to cut interest rates aggressively, positioning the economy to better absorb the damage of an ongoing trade war.