Unemployment up to 3-year high, despite record participation rate

While the Australian market is seeing a high participation rate, the seasonally adjusted unemployment rate rose to 4.2 per cent in July, taking the unemployment rate to its highest level since November 2021.

According to data released by the Australian Bureau of Statistics (ABS) earlier today (Thursday, 15 August), the seasonally adjusted unemployment rate rose 0.1 percentage point, to 4.2 per cent, in July.

In trend terms, the ABS detailed in a statement, employment grew by 48,000 people (0.3 per cent), which was faster than the 20-year pre-pandemic average (0.2 per cent), and hours worked grew 0.2 per cent between June and July, slightly slower than the increase in employment.

Elsewhere, seasonally adjusted monthly hours worked rose by 0.4 per cent, in line with the 0.4 per cent increase in employment, the ABS noted.

Speaking about the figures, ABS head of labour statistics Kate Lamb: “The unemployment rate rose to 4.2 per cent in July, with the number of unemployed growing by 24,000 people and employed by around 58,000. This combined increase lifted the participation rate to a record high of 67.1 per cent.

“The employment-to-population ratio rose by 0.1 percentage point to 64.3 per cent, indicating employment growth was faster than population growth, and was just below the historical high of 64.4 per cent in November 2023.

“Although the unemployment rate increased by 0.1 percentage point in each of the past two months, the record-high participation rate and near-record-high employment-to-population ratio shows that there continues to be a high number of people in jobs, and looking for and finding jobs.

“While unemployment increased to 637,000 people in July, the highest it has been since November 2021, it remains around 70,000 people below its pre-pandemic level.

“The unemployment rate of 4.2 per cent was also the highest since November 2021, but was 1.0 percentage point lower than March 2020.”

On the question of hours worked and underemployment, Lamb said: “In July, the proportion of employed people who worked reduced hours due to illness was 4.2 per cent, similar to what we saw in May and June. This continues to remain higher than the five-year pre-pandemic July average of 3.6 per cent.”

“However, we also continue to see this balanced by slightly lower than usual reporting of some other reasons that people work less hours than usual, such as people taking annual leave.”

On the underlying trend data, she said: “The employment and participation measures remain historically high while unemployment and underemployment measures remain historically low, compared with what we saw before the pandemic. This suggests the labour market remains quite tight.”