Unemployment holds steady

Labour Force figures for August have revealed that the unemployment rate held steady at 4.2 per cent in seasonally adjusted terms, according to the Australian Bureau of Statistics (ABS).

The number of employed people rose by 47,500 to 14,458,600 (0.3 per cent increase), while the number of unemployed people fell by 10,500 (1.6 per cent) to 627,000.

Along with the unemployment rate holding steady, this also resulted in the participation rate remaining at a record high of 67.1 per cent.

Kate Lamb, ABS head of labour statistics, said: “The growth in employment increased the employment-to-population ratio by 0.1 percentage point to 64.3 per cent, which is just below the November 2023 historical high of 64.4 per cent.

“This rise in the employment-to-population ratio was underpinned by an increase in the employment-to-population ratio for men, which rose by 0.2 per cent to 68.1 per cent, while the measure stayed at the near historical high of 60.6 per cent for women.

“The high employment-to-population ratio and participation rate shows that there are still large numbers of people entering the labour force and finding work, as employers continue to look to fill a more than usual number of job vacancies.

“While the number of unemployed people fell slightly to 627,000 in August, it has risen by around 45,000 people since the end of 2023.”

Reacting to the data, Anneke Thompson, chief economist at CreditorWatch, said this was “good news for the Reserve Bank of Australia (RBA), who remains hopeful that its monetary policy tightening measures does not lift the unemployment rate beyond its forecasts”.

Currently, the RBA has forecast unemployment to reach 4.3 per cent by December and 4.4 per cent by March 2025 and is expected to hold around that level until at least December 2026.

“The Australian labour force appears to be in better shape than the US, where revisions to historic data over the past few months have been significant and in the negative,” Thompson said.

Judo Bank economists Warren Hogan and Matthew De Pasquale noted RBA assistant governor Sarah Hunter’s recent comments that highlighted that the labour market is “still tighter than ‘full employment’ despite easing over the past year”.

“The assistant governor made the point that peer economics that are now cutting rates have seen the ratio of job vacancies to unemployed persons return to pre-pandemic levels,” they said.

“But this is not the case in Australia where this ratio remains elevated on pre-pandemic levels, despite coming down since 2022 highs.

“The unemployment rate is predicted to continue rising; however, the underlying driver will continue to be labour force growth outpacing employment growth, rather than outright job losses.”

Furthermore, Westpac economist Ryan Wells said that the data once again highlighted that the labour market “remains an important pillar of support in what is otherwise a challenging economic backdrop”.

“This is unlikely to materially change the RBA’s perspective on the state of the labour market, which it currently views as ‘tight relative to full employment’ and as moving into ‘better balance’,” Wells said.

“There are risks in the detail that bear close monitoring over the period ahead, particularly with respect to the unevenness of labour market conditions across sectors.”

[RELATED: Unemployment rate reaches highest level since November 2021]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.