Unemployment rate drops to 4.1%

In December 2025, unemployment fell month on month, but increased year on year, with hiring found to have slowed ahead of the holiday period, findings have revealed.

In its latest national Labour Force release, the Australian Bureau of Statistics (ABS) confirmed that the unemployment rate had fallen to 4.1 per cent in December 2025, down 0.1 per cent month on month and up 0.3 per cent year on year.

The release also revealed that 6,400 more people became unemployed in December 2025; however, the youth unemployment rate decreased to 9.5 per cent.

ABS head of labour statistics Sean Crick said: “This month, we saw more 15–24 year olds moving into employment, contributing to the rise in overall employment and the fall in the unemployment rate.”

Employment was found to have increased by 24,800 people (0.2 per cent) – full-time employment increased by 13,300 to 10,108,000 people, and part-time employment also increased by 11,500 to 4,578,100. For this period, the part-time share of employment was 31.2 per cent.

Further, the release noted that monthly hours worked in all jobs increased to 1,997 hours, while the participation rate for this period remained at 66.8 per cent, remaining at 70.7 per cent for men and 63 per cent for women.

In terms of underemployment, the ABS confirmed that the underemployment rate stayed stable at 5.9 per cent, and so did the underutilisation rate, which remained at 10.1 per cent.

Based on SEEK’s December Employment Report, job ads experienced a modest decrease ahead of the holiday period – with ad numbers falling 1.2 per cent month on month in December, with an annual decline of 3.5 per cent.

SEEK senior economist Dr Blair Chapman said: “The industrial and construction sectors that had provided a degree of stability throughout much of the year eased in December.”

Based on its data, job ads for manufacturing, transport and logistics industries fell 1.6 per cent month on month, though demand remained 3.3 per cent higher year on year.

In addition, it found that job ads for the trades, services and construction industries also experienced a modest fall of 0.5 per cent and 0.3 per cent, respectively; however, they experienced an increase over the year by 3.1 per cent and 6 per cent, respectively.

“Hiring typically slows down ahead of the Christmas and New Year period, and the 2025 slowdown was a little bigger than we’ve seen historically,” Chapman said.

“January traditionally brings renewed momentum into the employment market, as businesses re-emerge from holiday mode. Whether the rebound in January is enough to see job ads trending up again will soon be seen.”

Employment Hero managing director of talent solutions, David Holland said: "This is a surprise, but a welcome one. These figures confirm the labour market is finally delivering after months of doom and gloom. Employment is rising and unemployment is edging down, which tells us employers are hiring, even in a high-cost environment."

"However, beneath the improvement, recovery is still fragile in the near-term for SMBs. Employment Hero data reveals how SMBs are faring and while we saw a healthy annual employment growth of 6.5 per cent, six times higher than what ABS reported, momentum is weakening," Holland added.

"Employment decreased 0.2 per cent from November and hours were down massively, across all timeframes tracked - monthly, quarterly, and annually. Our data also reveals pressure sitting in the details. Younger Australians were hit hardest in December, with under-35s seeing softer wages and fewer shifts at a time of year when we typically see a lift, especially in retail and hospitality."

"Still, this is the kind of outcome that could mean a rate hike is coming sooner than later. The economy might be slowing, but the jobs market is turning a corner.”

Carlos Tse

Carlos Tse is a graduate journalist writing for Accountants Daily, HR Leader, Lawyers Weekly.