Australia’s unemployment rate increased to 4.2 percent in July, according to data released by the Australian Bureau of Statistics (ABS). This is the highest level since November 2021 but still 1 percentage point lower than March 2020. The ABS also noted that 58,200 new jobs were created during this period. The number of unemployed people rose by 24,000, while the number of employed people increased by over 58,000. This resulted in a record-high participation rate of 67.1 percent.
Kate Lamb, the head of labour statistics at the ABS, mentioned that despite the rise in unemployment, it was still 70,000 below the pre-pandemic level. She highlighted that the employment-to-population ratio rose to 64.3 percent, indicating that employment growth outpaced population growth. It was just below the historical high of 64.4 percent in November 2023. Lamb emphasized that the record high participation rate and near-record high employment-to-population ratio show that there continues to be a high number of people in jobs and looking for jobs.
The data also revealed that seasonally adjusted monthly hours worked in Australia increased by 0.4 percent, in line with the 0.4 percent jump in employment. However, the proportion of employed people who worked reduced hours due to illness remained at 4.2 percent in July, higher than the pre-pandemic average of 3.6 percent. Lamb mentioned that this was balanced by slightly lower reporting of other reasons for reduced hours, such as annual leave.
The rise in hours worked led to a 0.1 percentage point decrease in the underemployment rate, which fell to 6.3 percent in July. However, the underutilization rate, which combines unemployment and underemployment rates, increased to 10.6 percent. This was 0.3 percentage point higher than in July 2023 but 3.4 percentage points lower than March 2020.
ANZ Head of Australian Economics, Adam Boyton, viewed the data as strong, noting that six-month average employment growth is almost back at population growth and running at its strongest pace since late 2022. He expects the Reserve Bank of Australia to reach a similar conclusion. Boyton highlighted that hours worked also rose in July, showing a 0.9 percent increase over the year.
However, the Coalition expressed concern about the unemployment rate, with Shadow Employment and Workplace Relations Minister Michaelia Cash and Shadow Treasurer Angus Taylor stating that working families were “going backwards under Labor’s inflation.” They claimed that more Australians are unemployed or looking for work, and that the number of unemployed Australians is at its highest level since the election. They emphasized the need for a back-to-basics economic agenda to achieve lower inflation and a strong growth economy.
On the other hand, Treasurer Jim Chalmers defended the Labor government’s record, stating that despite the increase in the unemployment rate, 58,200 new jobs were created. He claimed that annual real wages have grown for the third consecutive quarter under Labor and that average full-time weekly earnings have increased by $159 under the Albanese Labor Government. Chalmers also highlighted that the gender pay gap is now at its lowest rate on record, at 11.5 percent.
Employment Minister Murray Watt noted that ABS data showed a decrease in the national gender pay gap from 12 percent in November 2023 to 11.5 percent. He mentioned the government’s efforts to secure record pay rises for women on award wages, fix the bargaining system to improve wages in feminized industries, and implement workplace laws that prioritize gender equity. Watt stated that the government is delivering on its promise to increase wages and promote gender equality in the workforce.
