Commentary and analysis of labour force data releases.

Australian labour market takes a backward step

I regularly warn against using the observations from one month to tell a story given that the data jumps around a lot at this frequency over time. It is clear that there is a lot of month-to-month variation in the data at present. The Australian Bureau of Statistics (ABS) released the latest labour force data today (September 18, 2025) – Labour Force, Australia – for August 2025, which reveals that the slowdown that has been signalled for some months and was interrupted by last month’s stronger result appears to have reasserted itself. Employment fell overall as did the participation, which saved the unemployment rate from rising. Without the fall in the participation rate, the official unemployment rate would have been 4.4 per cent (rounded) rather than its current official value of 4.2 per cent. That means some workers are likely to have moved into hidden unemployment (outside the labor force) as job opportunities have stalled. Underemployment fell 0.1 point, which was surprising given the significant loss of full-time employment. I expect a revision to this result next month. It remains a fact that with 9.9 per cent of available labour not being used it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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US Bureau of Labor Statistics revisions are not some arbitrary act but an attempt at making the data as accurate as possible

Last Tuesday (September 9, 2025), the US Bureau of Labor Statistics published a news release – Preliminary benchmark revision for March payroll employment is -911,000 (-0.6%) – which told us that its employment estimates for the current year are likely to be significantly overstated. Given that the BLS has been under intense political scrutiny in recent months, with the US President recently sacking the Bureau’s head, I expect some noise from the conspiracy types to accompany this preliminary statement from the BLS. The fact is that when we undertake the adjustment process that the BLS deploys (explained below), the average monthly change in non-farm employment between March 2024 and March 2025 will turn out to be around half the current estimate – 71 thousand as opposed to 147 thousand per month. In other words, when the revisions are finalised in February 2026, the labour market will be assessed as having started slowing considerably in 2024 and continuing into 2025. I explain all this in the following discussion but emphasise that the process of revision is not some arbitrary act to make some politicians look bad. It is actually a process that upholds full transparency and is a regular activity that national statistical agencies undertake to make the data they publish as accurate as possible.

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Australia’s unemployment rate is well above any reasonable full employment level

Central banks around the world tightened interest rates starting late 2021 in some places and there was a systematic period of hikes over the next year or more despite the inflationary pressures mostly showing signs of abatement as a result of factors that were not sensitive to the rising interest rates. In Australia, the RBA started hiking in May 2022 and continued through to November 2022, despite the inflation rate peaking in December 2022. The RBA consistently claimed the labour market was too tight and that the unemployment rate was below the unobservable Non-Accelerating-Rate-of-Unemployment (the so-called NAIRU), which meant to stabilise inflation in their eyes, they had to force unemployment higher. Their logic was not consistent with reality and tens of thousands of workers have lost their jobs over the last few years as a result of deliberate policy choices all for nothing. The inflation outbreak was not the result of excess spending and came down on its own accord as the COVID constraints abated and supply chains worked around Putin and all that. In this blog post I produce some research that further cements that conclusion. There are some technical details but essentially the narrative should be easy to follow.

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Australian labour market – slight improvement but uncertainty continues

The Australian Bureau of Statistics (ABS) released the latest labour force data today (August 14, 2025) – Labour Force, Australia – for July 2025, which reveals that last month’s gloom might not have been the start of a downward trend. The current data has blurred that outlook and the best we can say is that the future is uncertain. The virtuous three were evident this month: rising employment (particularly full-time), constant participation, and falling unemployment. Underemployment also fell 0.1 point as a result of the strong full-time employment result. It remains a fact that with 10.1 per cent of available labour not being used it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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Australian labour market – evidence is mounting of policy sabotage driving the unemployment rate up

The Australian Bureau of Statistics (ABS) released the latest labour force data today (July 17, 2025) – Labour Force, Australia – for June 2025, which reveals that finally, the slack that the combination of the fiscal austerity and the high interest rates has created is feeding into the labour market as employment growth slows and the unemployment rate rises (by 0.2 points) to 4.3 per cent. The array of indicators now suggest that there is a systematic slowdown occurring in the labour market. Unemployment has now risen by 59.5 thousand or 0.4 points over the last 6 months as the fiscal position remains tight and the central bank holds interest rates at elevated levels. This is unnecessary policy sabotage – inflation began declining in December 2022 and is now at relatively stable and low levels – there is no reason for the government to be running contractionary policy stance. Underemployment also rose 0.1 point. The broad labour underutilisation rate (sum of unemployment and underemployment) rose to 10.3 per cent (up 0.3 points). It remains a fact that with 10.3 per cent of available labour not being used it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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Treasurer, please sack the RBA governor and the Monetary Policy Board members – they have gone rogue

Once again the Reserve Bank of Australia has gone rogue. On Tuesday (July 8, 2025), it held its cash rate target (the interest rate that expresses its monetary policy stance) constant at 3.85 per cent despite all the indicators suggesting that it would cut that target rate. The financial markets are in uproar because they bet on the cut and will have lost money on a myriad of speculative bets based on that expectation. I don’t care about that. But what I care about is that the RBA decision continues to punish low-income mortgage holders and reward high income holders of financial assets, thus continuing one of the most pernicious redistributions of income in the history of our nation. Moreover, the logic expressed by the RBA indicates they really have no idea of what the reality of the situation is and are rather living in a world of fictional economics that reality has exposed to be false. The Treasurer should sack the Governor and her underlings as well as dismissing the Monetary Policy board who have, in my view, failed. Such systematic failures should require the RBA officials to be dismissed.

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Australian Labour Market – steady but signs of a deterioration

The Australian Bureau of Statistics (ABS) released the latest labour force data today (June 19, 2025) – Labour Force, Australia – for May 2025, which revealed that the unemployment rate remained unchanged at 4.1 per cent for the second consecutive month. There was a small decrease in overall employment (-2,500) which was offset by a 0.1 point decline in the participation rate, The net effect was a small decline in official unemployment (-2,600) and a stable unemployment rate. Whether the fall in employment and participation is a signal of a significant slowdown in the coming months is unclear at this stage. Monthly data fluctuates up and down. There was a 1.3 per cent rise in monthly hours worked and significant growth in full-time employment which blurs an easy interpretation of the other changes. Underemployment also fell 0.1 point growth. The broad labour underutilisation rate (sum of unemployment and underemployment) fell to 10 per cent (down 0.1 point) on the back of the declining underemployment. It remains a fact that with 10 per cent of available labour not being used it is ludicrous to talk about Australia being close to full employment. There is substantial scope for more job creation given the slack that is present.

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The Webbs knew more than a century ago that if you pay high wages you get high productivity

During the recent inflationary episode, the RBA relentlessly pursued the argument that they had to keep hiking interest rates, and then, had to keep them at elevated levels, well beyond any reasonable assessment of the situation, because wage pressures were set to explode. They claimed their business liaison panel was telling them that wages were becoming a problem despite the facts being that nominal wages growth was at record lows and real wages (the purchasing power of the nominal wages) were going backwards at a rate of knots. The RBA massaged that argument by adding that productivity was low and that there was no ‘non-inflationary’ space for wage increases as a result, as if it was the workers’ fault. Yesterday (May 28, 2025), the Productivity Commission (a federal agency that morphed out of the old – Tariff Board – published an interesting research report – Productivity before and after COVID-19 – which lays bare some of the misinformation that the corporate sector has been pumping into the public debate about productivity growth. In particular, it demonstrates that forcing workers to work longer hours undermines productivity growth, that work-from-home is beneficial, and the lack of investment in productive infrastructure by corporations is a major reason for the lagging productivity growth in Australia.

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Australian labour force data – employment growth absorbs rising participation without increasing the unemployment rate

Last month’s labour force data for Australia revealed a sluggish labour market, seemingly on the cusp of contraction as other indicators were pointing in that direction. The Australian Bureau of Statistics (ABS) released the latest labour force data today (May 15, 2025) – Labour Force, Australia – for April 2025, which revealed that employment growth was strong enough to absorb a 0.3 point rise in participation without increasing the unemployment rate. The broad labour underutilisation rate (sum of unemployment and underemployment) did, however, rise 0.2 points to 10.1 per cent on the back of a rise in underemployment. The fact that 10.1 per cent of available labour are not being used indicates that folly of those who claim Australia is close to full employment. There is substantial scope for more job creation given the slack that is present.

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Australia labour market – sluggish as growth slows

The Australian Bureau of Statistics (ABS) released the latest labour force data today (April 17, 2025) – Labour Force, Australia – for March 2025. It revealed that the unemployment rate rose 0.1 point (on rounding) to 4.1 per cent, employment rose by 32,200 (0.2 per cent), the underemployment rate was unchanged at 5.9 per cent, and the participation rate rose 0.1 point (on rounding). Monthly hours worked fell by 6 million (-0.3 per cent). The broad labour underutilisation rate (sum of unemployment and underemployment) was 9.9 per cent, which puts the claims that this is a tight labour market into perspective. There is substantial scope for more job creation given the slack that is present.

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