Unemployment: Australia’s jobless rate steady at 4.2 per cent as immigration slows

Australia’s unemployment rate has remained stable as 5400 jobs were lost, making interest rate cuts more likely in coming months.

The jobless rate in August was steady at 4.2 per cent, new Australian Bureau of Statistics data showed, which could also make the Reserve Bank of Australia more inclined to cut interest rates on Melbourne Cup Day in November.

Fewer people had work as the number of full-time jobs fell by 40,900 as 35,500 new part-time positions were created.

In Western Australia, the jobless rate was lower at 3.8 per cent as the resources-rich state continued to benefit from the nation’s strongest population growth.

Economists had been expecting the jobless rate for August to remain stable at 4.2 per cent as 20,000 new jobs were created.

But more jobs were lost overall as the participation rate fell slightly by 0.1 percentage points to 66.8 per cent, from near record highs reached earlier this year.

AMP economist My Bui said the Reserve Bank was still likely to cut rates in November, following the release of September quarter inflation data, because the labour market was softening and unlikely to add to price pressures.

“The RBA’s not super worried about the labour market, right now, which I guess is quite justified given the unemployment rate is still at 4.2 per cent,” she told The Nightly. “Our economy still needs a bit of help from the rate cut cycle. The consumer is still somewhat fragile in our opinion.”

EY chief economist Cherelle Murphy said the labour market would weaken without more rate cuts, after separate data from Jobs and Skills Australia showed a 4.2 per cent drop in online job ads in August, marking the weakest number since early 2021.

“Recent labour market data suggests that unless there are further interest rate cuts, the labour market will weaken from this prime position,” she said. “We expect the cash rate to fall one more time this year, with a strong possibility of a further rate cut in early in 2026.”

The futures market is still continuing to expect a rate cut on November 4, followed by more relief in early 2026 that would take the Reserve Bank cash rate from 3.6 per cent to 3.1 per cent for the first time since February 2023.

Immigration slowdown

Australia’s overall population growth pace of 1.6 per cent in the year to March was the slowest in three years.

Net overseas migration in the year to March fell to 315,900, down from 340,800 in 2024. But it was still well above the 194,400 level of 2019-20, as voluntary caps on new international student enrolments did little to dramatically reduce the number of new long-term arrivals.

“They’re not really legally enforceable. So basically, once the education provider reaches say 80 per cent of the target number, then the student visa applications for that provider go into a slow-processing lane,” Ms Bui said.

The latest net overseas migration number was below the Treasury’s pre-election March Budget forecast of 335,000 for 2024-25.

Immigration made up three-quarters of Australia’s 423,400 net population increase, factoring in the natural increase of 107,400 newborn Australians minus deaths.

State of the nation

Western Australia had a particularly low unemployment rate of 3.8 per cent and Australia’s strongest population growth pace of 2.3 per cent - a level well above the 1.6 per cent national average.

The resources-rich state also had the strongest per capita net interstate migration pace of 11,675 in the year to March.

Queensland had the strongest overall net interstate migration of 24,015 but its jobless rate of 4.4 per cent was higher than average, and equal with Victoria.

The Sunshine State’s population growth pace of 1.8 per cent was also equal with Victoria, which had only a small net interstate exodus of 2,318.

South Australia had the highest jobless rate of 4.9 per cent and a weaker population growth pace of 1.1 per cent as 1,470 left the state on a net basis.

Tasmania had the lowest jobless rate of 3.2 per cent despite having the weakest annual population growth of just 0.2 per cent, as 2,217 people left the island state.

New South Wales had a jobless rate of 4.2 per cent and a weaker than average population growth pace of 1.2 per cent, despite the big overseas influx flowing into Sydney, Australia’s most expensive capital city property market.

Australia’s most populated state had the biggest interstate exodus of 26,560 as 96,761 new overseas migrants moved in.

By comparison, Victoria housed 93,176 new overseas migrants, ahead of Queensland on 54,535, Western Australia on 41,395 and South Australia’s 18,748 intake.

Ageing productively

Australia’s still tight labour market is also seeing a surge in older people continuing to work into their 70s and 80s, with a new KPMG analysis of ABS data showing a quarter of a million baby boomers still in the labour force.

In the 2024-25 financial year, 260,000 Australians in their seventies still had a job, a level more than double the 125,000 number from a decade earlier.

The number in their eighties still working also more than doubled, from 9,000 to 20,000.

KPMG urban economist Terry Rawnsley said the rise of working from home meant more older Australians were staying in the labour force and embracing flexible working arrangements if they could do a white collar job.

“The adoption of working from home has made many older Australians in professional jobs realise they can ‘semi-retire’ and continue dabbling in the workforce part time,” he said.

“Given the physically demanding nature of work faced by blue-collar workers, it is very challenging for them to continue working into their 70s. Pulling out a laptop in your 70s is much easier compared to laying bricks at that age.”

Australians are eligible for the age pension at 67 and they can access their superannuation at 60 and be spared from having to pay a 15 per cent earnings tax on their retirement savings.