Unemployment rate falls, but we’re still ‘far from out of the woods’

The unemployment rate has dropped through November, showing some signs of stabilisation. Despite this, some believe we’re far from normal.

The latest data from the Australian Bureau of Statistics (ABS) revealed that the unemployment rate for November dropped 0.2 percentage points to 3.9 per cent.

November reportedly saw an influx of unemployed people take up work, spurring results.

“With employment rising by 36,000 people and the number of unemployed decreasing by 27,000 people, the unemployment rate fell to 3.9 per cent,” said ABS head of labour statistics David Taylor.

“In November, we saw a higher-than-usual number of people moving into employment who were unemployed and waiting to start work in October. This contributed to the rise in employment and fall in unemployment.”

The drop in unemployment was pushed along by a 0.2 per cent growth in employment over the month, reaching a total of 14,544,200 people. The ABS said that since mid-2024, the average monthly rise has been 0.3 per cent, which is in line with population growth.

Meanwhile, the employment-to-population ratio reached 64.4 per cent, equal to the level a year ago and 2.2 percentage points above the pre-pandemic level. Underemployment stayed firm at 6.2 per cent, while monthly hours worked increased to 1,970 million.

Taylor said: “The participation rate fell by 0.1 percentage point to 67.0 per cent in November, from the historic high of 67.1 per cent in September. Despite the fall, the participation rate was the same as a year ago, and 1.5 percentage points higher than March 2020.”

“The recent growth in population has boosted the labour supply as employment has kept up with population growth.”

While the drop is a promising sign for the economy, Employment Hero’s CEO and chief economist Ben Thompson has urged caution as we’re “far from out of the woods”.

“While the ABS unemployment rate finally declines, Employment Hero’s data reveals nuanced challenges in Australia’s job market. Casual workers continue to bear the brunt of economic uncertainty, with working hours down 13.1 per cent year on year despite recent signs of recovery.

“The bright side is that retail and hospitality emerged as surprise performers, posting a 2.1 per cent job growth in November – the sector’s first positive momentum since late last year. Wage growth has hit 6 per cent annually, boosted by in-demand roles like truck drivers (up 14.9 per cent) and finance professionals (up 10 per cent),” said Thompson.

“However, businesses remain cautious. Wage pressures and economic headwinds are keeping workforce expansion tentative, signalling a challenging road ahead for Australian workers and small businesses as we enter 2025. A telltale sign is the substantial increase in hours worked by property valuers, up 8.3 per cent MoM and 22.3 per cent YoY, pointing to mortgage stress or anticipation of rate cuts after yet another RBA pause. While the job market shows signs of resilience, it’s far from out of the woods.”