Final month, I famous that the sharp shift in direction of part-time work was the primary sign {that a} labour market contraction was coming. The most recent knowledge launched right this moment confirms that the contraction is now consuming into total employment and pushing the unemployment charge up. The Australian Bureau of Statistics (ABS) launched the most recent labour drive knowledge right this moment (August 20, 2026) – Labour Pressure, Australia – for July 2026 – which confirmed that the labour market deteriorated in July. Employment progress was destructive though the economic system added full-time jobs, which offsets a few of the severity of the decline. General working hours contracted sharply. Official unemployment elevated however the enhance would have been bigger had the participation charge not decelined by 0.2 factors. Had the participation charge not declined in July, the official unemployment charge could be round 4.7 per cent relatively than the printed charge of 4.5 per cent. There at the moment are 10.8 per cent of obtainable labour not getting used (both unemployed or underemployed), which makes a farce of the RBA’s claims that the labour market is tight. There may be substantial scope for extra job creation given the slack that’s current. There may be substantial scope for extra job creation given the slack that’s current.
The ABS press launch – Unemployment charge rises to 4.5% in July – famous that:
he seasonally adjusted unemployment charge rose to 4.5 per cent in July …
In July, we recorded a 16,000 individual fall in employment, while the variety of unemployed individuals rose by 4,000 …
The vast majority of the autumn in employment got here from males, which fell by 11,000 individuals. There have been 10,000 fewer males employed part-time, and 1,000 fewer in full-time employment in July …
The employment-to-population ratio and the participation charge each fell 0.2 proportion factors, to 63.9 per cent and 66.9 per cent respectively.
The underemployment charge was 6.4 per cent in July.
Hours labored down 0.6 per cent in July
“There have been 12 million much less hours labored this month, with these employed full-time working 7 million much less hours, and people employed part-time working 5 million much less hours”, Mr Crick mentioned.
New South Wales and Western Australia had been the principle drivers of this fall, each down 8 million hours.
Pattern unemployment charge rises marginally to 4.5 per centPattern employment grew by 0.2 per cent whereas hours labored fell by 0.1 per cent in July.
… underutilisation charge grew by 0.1 proportion factors to 10.8 per cent.
Abstract
1. Final month, the adjustment was to shed full-time work and provide elevated part-time alternatives – which is usually a precursor to jobs being eradicated.
2. This month, employment progress was destructive.
3. The rise in unemployment was muted as a result of participation additionally fell – much less working lively.
4. The broad labour underutilisation (sum of unemployment and underemployment) is now at 10.9 per cent.
3. That may be a very slack labour market.
Employment progress destructive in July
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 development.
The Employment-to-Inhabitants ratio supplies a measure of the state of the labour market that’s impartial of the provision shifts within the labour market (pushed by the shifts within the participation charge).
The underlying working age inhabitants grows steadily whereas the labour drive shifts with each underlying inhabitants progress and the participation swings.
The next graph reveals the Employment-Inhabitants ratio rose 0.2 factors to 64 per cent in July.
The subsequent 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 – 30.3 thousand
- 2025 – 12.6 thousand
- 2026 thus far – 20.8 thousand
Month-to-month hours labored fell 12 million (-0.64 per cent) in July 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 development.
Unemployment rose by 4,200 to 691,500 individuals
The unemployment charge rose 0.1 level to 4.5 per cent, however the enhance would have been a lot bigger had not the participation charge fell (see under for evaluation).
In impact, the contraction is seeing official unemployment and hidden unemployment each rising.
The next graph reveals the evolution of the official unemployment charge since 1980.
What was the influence of the declining participation charge on unemployment in July 2026
Labour drive participation fell 0.2 factors in July.
The query is what would the unemployment charge have been, given the employment decline in April, if the participation charge had not additionally fallen?
These ideas assist us reply any such query:
- The labour drive is a subset of the working-age inhabitants (these above 15 years previous). The proportion of the working-age inhabitants that constitutes the labour drive is named the labour drive participation charge. Thus adjustments within the labour drive can influence on the official unemployment charge, and, consequently, actions within the latter must be interpreted fastidiously. A rising unemployment charge could not point out a recessing economic system.
- The labour drive can broaden on account of common inhabitants progress and/or will increase within the labour drive participation charges (and vice versa).
The next Desk reveals the breakdown within the adjustments to the principle aggregates (Labour Pressure, Employment and Unemployment) and the influence of the autumn within the participation charge.
The change within the labour drive in July 2026 was the end result of two separate components:
- The underlying inhabitants progress added 24.9 thousand individuals to the labour drive. The inhabitants progress influence on the labour drive combination is comparatively regular from month to month; and
- The autumn within the participation charge meant that there have been 36.5 thousand LESS employees within the labour drive (relative to what would have occurred had the participation charge remained unchanged).
- The web consequence was that the labour drive fell 11.7 thousand.
Evaluation:
1. If the participation charge had not have fallen in July 2026, complete unemployment, given the present employment degree, would have been 728.1 thousand relatively than the official depend of 691.5 thousand as recorded by the ABS – a distinction of36.5 thousand employees (the ‘participation impact’).
2. With out the autumn within the participation charge, the official unemployment charge would have been 4.7 per cent relatively than its present official worth of 4.5 per cent.
3. The labour market is significantly weaker in July.
Broad labour underutilisation – at 10.8 per cent in July 2026
The next graph reveals the evolution of underemployment and the Broad labour underutilisation charge since 1980.
Teenage labour market – vital job losses in July
There was a considerable decline in part-time employment for youngsters in July, offset considerably by the advance in full-time employment.
- Full-time employment rose 14.1 thousand (7.5 per cent).
- Half-time employment fell 24.4 thousand (-3.6 per cent).
- Complete teenage (15-19) employment fell 10.3 thousand (-1.2 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 drive) the next knowledge stories the shifts within the Employment-Inhabitants ratio for youngsters.
The Teenage Employment-Inhabitants ratios and their month-to-month adjustments in July 2026 had been:
- 46.547.7 per cent – down 1.0 level.
- Females: 51.9 per cent – down 0.4 factors.
- Complete: 49.2 per cent – down 0.7 factors.
Conclusion
My normal warning to take care in deciphering month-to-month labour drive adjustments – they’ll fluctuate for quite a lot of causes and it’s imprudent to leap to conclusions on the again of a single month’s knowledge.
- The labour market deteriorated in July.
- Employment progress was destructive though the economic system added full-time jobs, which offsets a few of the severity of the decline.
- General working hours contracted sharply.
- Official unemployment elevated however the enhance would have been bigger had the participation charge not decelined by 0.2 factors.
- Had the participation charge not declined in July, the official unemployment charge could be round 4.7 per cent relatively than the printed charge of 4.5 per cent.
- There at the moment are 10.8 per cent of obtainable labour not getting used (both unemployed or underemployment), which makes a farce of the RBA’s claims that the labour market is tight.
- There may be substantial scope for extra job creation given the slack that’s current.
That’s sufficient for right this moment!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
