Australia’s job market saw an improvement in July, with the unemployment rate edging down to 4.2%, bolstered by a sharp increase in full-time roles. The gain was led by a notable rise in female participation, reaching its highest recorded level, according to the Australian Bureau of Statistics (ABS).
This modest but meaningful shift reflects the resilience of the Australian labour market amid a climate of economic uncertainty and tight monetary policy. While job creation remained steady overall, the composition of new employment revealed notable developments in workforce dynamics.
Although expectations of a September interest rate cut have cooled, economists suggest the latest labour data may influence decisions later in the year. The Reserve Bank of Australia (RBA) is now likely to monitor broader indicators more closely in the coming months.
Full-Time Job Surge Drives Improved Labour Market Conditions
In July, employment increased by nearly 25,000 people, according to the ABS, with full-time positions accounting for 60,000 new jobs. This surge helped bring the unemployment rate down from 4.3% in June to 4.2%. Simultaneously, the number of unemployed individuals in Australia declined.
A major contributor to this growth was the increase in female employment, with 40,000 women entering full-time roles. The ABS reported that the female participation rate hit a record high, underlining ongoing shifts in workforce composition.
Meanwhile, the participation rate—which measures those employed or actively seeking work—remained stable at 67%. The underemployment rate also dropped to 5.9%, and the monthly hours worked rose, further signalling a positive shift in labour market utilisation.
AMP’s Deputy Chief Economist, Diana Mousina, described the data as a “nice little treat”, noting that the labour market remained “in solid shape”. She added that the current unemployment figure was still low compared to historical norms, last seen in 2007.
Interest Rate Expectations Shift as RBA Eyes Labour Market Trends
The recent figures are expected to influence the RBA’s approach to monetary policy. According to RBC Capital Markets’ Chief Economist Su-Lin Ong, “elevated levels of participation” and an improved employment-to-population ratio support the view that the labour market remains slightly tight.
Economists now largely anticipate that any rate cut will likely occur in November, rather than September, following this month’s 0.25 percentage point reduction that brought the cash rate to 3.6%.
Capital Economics’ Abhijit Surya noted the RBA is expected to stay on the sidelines in September, stating that the July data “should have few concerns” for the central bank resuming its easing cycle later in the year, assuming inflation and economic activity remain subdued.
Meanwhile, Callam Pickering from Indeed cautioned that job growth in 2025 has been underwhelming so far, with employment rising by only 113,300 people over the first seven months. He warned that continued slow growth could pressure the unemployment rate upwards.
