The labour market contraction that I’ve been signalling for the final two months continued in August. The Australian Bureau of Statistics (ABS) launched the most recent labour power knowledge in the present day (September 24, 2026) – Labour Power, Australia – for August 2026 – which confirmed that the labour market deteriorated additional in August, in that full-time employment progress was adverse and unemployment rose. I think, nonetheless, that the September launch will present some revisions to the info given the adjustments that the ABS are making to its survey assortment mannequin (see beneath). General, there at the moment are 10.8 per cent of accessible labour not getting used (both unemployed or underemployed), which makes a farce of the RBA’s claims that the labour market is tight. There’s substantial scope for extra job creation given the slack that’s current.
The abstract seasonally-adjusted statistics for August 2026 are:
- Employment rose 39.5 thousand (0.3 per cent).
- Full-time employment fell 6.3 thousand (-0.1 per cent).
- Half-time employment rose 45.8 thousand (1.0 per cent).
- Unemployment rose by 28.2 thousand to 722.9 thousand individuals
- The unemployment fee rose 0.2 factors to 4.65 per cent.
- The participation fee rose 0.2 factors to 67.1 per cent.
- The Employment-population ratio was regular on 63.9 per cent.
- Month-to-month hours labored rose 13.7 million (0.69 per cent).
- Underemployment fell by 0.1 level to six.2 per cent – falling 18.9 thousand to 962.9 thousand.
- The Broad Labour Underutilisation fee (the sum of unemployment and underemployment) was regular on 10.8 per cent – the rise in unemployment matching the autumn in underemployment.
- General, there are 1,685.9 thousand individuals both unemployed or underemployed.
The ABS press launch – Unemployment fee rises to 4.6% in August – famous that:
The seasonally adjusted unemployment fee rose to 4.6 per cent in August …
This month there was 39,000 extra individuals in employment, and 28,000 extra individuals in unemployment.”
Half-time employment rose by 46,000 individuals in August, whereas full-time employment fell by 6,000 individuals.
The ABS additionally issued a warning that the adjustments to the Labour Power Survey mannequin may have had “an unintended impression on August 2026 estimates” though the impression was anticipated to be “smaller than regular sampling variability and that the August knowledge is fit-for-purpose”.
Abstract
1. Full-time employment continued to shrink.
2. The fixed employment to inhabitants fee means we had been marking time by way of the steadiness between employment and underlying inhabitants progress.
3. The rise in participation might be a statistical anomaly which will probably be revealed when the changes are made subsequent month.
3. It’s exhausting (unimaginable) to reconcile this knowledge which the RBA governor’s current claims that the labour market remains to be too tight and that unemployment must rise in the direction of 5 per cent.
Employment progress modest and biased in the direction of part-time jobs in August
The next graph reveals the expansion in complete, full-time, and part-time employment for the final 24 months.
The next desk reveals the shifts during the last 6 months which helps to see the underlying pattern.
The Employment-to-Inhabitants ratio offers a measure of the state of the labour market that’s unbiased of the availability shifts within the labour market (pushed by the shifts within the participation fee).
The underlying working age inhabitants grows steadily whereas the labour power shifts with each underlying inhabitants progress and the participation swings.
The next graph reveals the Employment-Inhabitants ratio was secure on 63.9 per cent in August.
The following graphs present the common month-to-month change in complete employment (first graph) and full- and part-time employment (second graph).
For complete employment the month-to-month common adjustments had been:
- 2022 – 46 thousand
- 2023 – 30.7 thousand
- 2024 – 30.4 thousand
- 2025 – 12.4 thousand
- 2026 to this point – 22.1 thousand
Month-to-month hours labored rose 13.7 million (0.69 per cent) in August 2026
The next graph reveals the expansion in month-to-month hours labored for the final 24 months, with the straight line being a easy linear regression to point pattern.
Unemployment rose by 28.2 thousand to 722.9 thousand individuals
The unemployment fee rose 0.2 factors to 4.65 per cent.
The next graph reveals the evolution of the official unemployment fee since 1980.
What was the impression of the rising participation fee on unemployment in August 2026
Labour power participation rose 0.2 factors in August.
The query is what would the unemployment fee have been, given the employment and inhabitants progress in August, if the participation fee had not additionally risen?
These ideas assist us reply the sort of query:
- The labour power is a subset of the working-age inhabitants (these above 15 years previous). The proportion of the working-age inhabitants that constitutes the labour power is known as the labour power participation fee. Thus adjustments within the labour power can impression on the official unemployment fee, and, consequently, actions within the latter have to be interpreted rigorously. A rising unemployment fee might not point out a recessing financial system.
- The labour power can develop on account of basic inhabitants progress and/or will increase within the labour power participation charges (and vice versa).
The next Desk reveals the breakdown within the adjustments to the primary aggregates (Labour Power, Employment and Unemployment) and the impression of the autumn within the participation fee.
The change within the labour power in August 2026 was the result of two separate components:
- The underlying inhabitants progress added 23.7 thousand individuals to the labour power. The inhabitants progress impression on the labour power combination is comparatively regular from month to month; and
- The rise within the participation fee meant that there have been 44 thousand MORE employees within the labour power (relative to what would have occurred had the participation fee remained unchanged).
- The web consequence was that the labour power rose by 67.7 thousand.
Evaluation:
1. If the participation fee had not have risen in August 2026, complete unemployment, given the present employment stage, would have been 678.9 thousand slightly than the official rely of 722.9 thousand as recorded by the ABS – a distinction of 44 thousand employees (the ‘participation impact’).
2. With out the rise within the participation fee, the official unemployment fee would have been 4.4 per cent slightly than its present official worth of 4.6 per cent.
Broad labour underutilisation – regular at 10.8 per cent in August 2026
The next graph reveals the evolution of underemployment and the Broad labour underutilisation fee since 1980.
Teenage labour market – part-time jobs progress solely in August
- Full-time employment fell 4.1 thousand (-2.0 per cent).
- Half-time employment rose 28.6 thousand (4.4 per cent).
- Complete teenage (15-19) employment rose 24.5 thousand (2.9 per cent).
The next desk summarises the shifts within the teenage labour marketplace for the month and during the last 12 months.
To place these adjustments right into a scale perspective (that’s, relative to dimension of the teenage labour power) the next knowledge experiences the shifts within the Employment-Inhabitants ratio for youngsters.
The Teenage Employment-Inhabitants ratios and their month-to-month adjustments in August 2026 had been:
- Males: 47.1 per cent – +0.4 factors.
- Females: 54.6 per cent – +2.3 factors.
- Complete: 50.7 per cent – +1.3 factors.
Conclusion
My commonplace warning to take care in deciphering month-to-month labour power adjustments – they will fluctuate for plenty of causes and it’s imprudent to leap to conclusions on the again of a single month’s knowledge.
That’s sufficient for in the present day!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
