Rise in unemployment shows jobs market softening slowly

The latest employment figures show Australia's unemployment rate rising to 4.5 per cent, indicating a slow softening in the jobs market. The fall in jobs of 15,800 in July was below consensus forecasts of a rise in employment of 12,000. While economists had expected the unemployment rate to remain steady at 4.4 per cent, the increase was modest, from 4.43 per cent to 4.46 per cent. The Australian Bureau of Statistics (ABS) noted that the smaller sample size in the July survey means estimates have higher variability. Employment data for June showed private sector wages growing at 0.7 per cent, the slowest pace since 2021. This data, combined with softer labour force figures, suggests the labour market is gradually softening. Reserve Bank of Australia (RBA) officials, including Deputy Governor Andrew Hauser, have been monitoring this trend to control inflation. Hauser stated that while the economy is softening, a more significant slowdown is needed to bring inflation back to target. The RBA has raised interest rates three times in 2026. AMP deputy chief economist Diana Mousina predicted that employment growth will plateau, keeping unemployment around 4.5 per cent for the remainder of the year. The ABS data also revealed that males were the primary contributors to the employment decline, with a drop of 11,000, while female employment saw a smaller fall, with part-time employment decreasing by 22,000 but full-time employment rising by 17,000. Participation rate slightly decreased by 0.2 percentage points to 66.9 per cent. Treasurer Jim Chalmers acknowledged the rise in unemployment as part of broader global economic challenges. The Reserve Bank expects unemployment to rise to 4.5 per cent by December, aligning with their economic forecasts. Mousina noted that while employment growth has moderated, it remains balanced, supporting wage growth and inflationary pressures.