BCEC Monthly Labour Market Update – August 2025

• Total employment down marginally, as full-time job losses outnumber part-time gains.
• Average monthly hours worked fall nationally; vacancies fall in all states and territories.
• The headline unemployment rate steady at 4.2 per cent but likely to rise in coming months.

Labour market stagnates in August – unemployment rate set to rise

August provided more evidence that the Australian labour market is softening. There were an estimated 5,400 fewer Australians in employment compared to July, with a fall of just over 40,000 full-time jobs partially cushioned by a rise in part-time jobs.

With jobs growth essentially non-existent for three of the past four months, the annual rate of employment growth has dropped to 1.5 per cent, the lowest in almost four years.

With the civilian working age population growing at 2.0 per cent per annum, the unemployment rate is likely to rise in coming months.

Other indicators of falling labour demand in August add weight to this assessment, in the form of a broad-based drop in online job vacancies and fewer average hours worked per worker.

The unemployment rate did hold steady at 4.2 per cent for August, thanks to the participation rate easing.

We anticipated declining participation would act as buffer to the unemployment rate rising in the event that jobs growth slowed, given female participation stood at a record high 63.4 per cent in July.

The female participation rate eased 0.2ppt and the male rate by 0.1ppt.

The August labour force release also contained revisions to previous monthly estimates as the ABS made adjustments in line with new population estimates (see page 5).

The new population benchmarks do not affect the unemployment rate or participation rate estimates, but they do affect estimates of the number of persons in the labour force and, in turn, in employment and unemployment.

These revisions show employment to have been lower than previously estimated in most months in 2025.

As a result, the outcome for annual employment to the June quarter was slightly weaker than the Reserve Bank’s ‘historical’ estimate in the most recent Statement on Monetary Policy.

On current trends, the RBA’s projected 1.6 per cent growth to the December quarter 2025 and unemployment rate of 4.3 per cent may be optimistic.

The revisions also indicate that growth in the working age population had been overestimated in all jurisdictions except the NT.

In last month’s MLMU we cautioned that July’s increase in national employment was all attributable to NSW, with employment actually falling across the rest of the country.

It’s worth noting that July’s employment gains in NSW were more than fully reversed in August, and only VIC recorded any jobs growth of note.

Cuts to bank jobs continue long run sectoral shifts

A number of banks have recently announced they will be shedding staff numbers, including Bendigo Bank, the Bank of Queensland, ANZ, and National Australia Bank. ANZ has flagged the largest cuts, with a reduction of 3,500 of its own staff and a further 1,000 contractors to be affected.

Those measures are in line with longer term structural changes in both the economy and in the financial sector.

If we look back since the turn of this century, labour force data show that employment in the Financial and Insurance Services industry has roughly maintained its total share of total employment. But within that industry category, it’s a tale of contrasting sectors.

Employment in the ‘Finance’ subcategory, which covers retail banking activity, has grown at about half the pace of overall employment since 2001.

In contrast, employment in the ‘Insurance and Superannuation Funds’ subcategory has expanded at twice the rate of overall jobs growth, and accelerated its growth in the past decade.

Over the first quarter of this century, employment has grown fastest in percentage terms in Mining, with employment more than tripling, followed by Healthcare and Social Services.

Employment has actually declined in four of the major industry categories over those 25 years: Agriculture, Forestry Fishing, and Hunting (down 30%); Information, Media and Telecommunications (20%), Manufacturing (17%); and Wholesale trade (2%).

Employment in manufacturing has seen the biggest fall in the terms of absolute number of workers, with around 175,000 fewer workers than in 2001.