BCEC Monthly Labour Market Update – June 2025

• Australia’s national unemployment rate rose to 4.3 per cent in June, up 0.2ppt for the month and the highest since mid-2022.
• The overall increase masked a sharp shift from full-time to part-time jobs, contributing to lower average monthly hours worked.
• WA’s unemployment rate rose to 4.1 per cent from 3.3 per cent at the end of 2024, exceeding the State Budget’s forecast for FY2025–26.
• Rising unemployment may reinforce expectations of a rate cut in August, but much depends on the June quarter CPI data.

National labour market showing signs of softening

Australia’s unemployment rate edged up to 4.3 per cent in June 2025, its highest level in over two years.

While overall employment increased slightly (+2,000 jobs), this masked a sharp internal shift with 38,000 full-time jobs lost and a 40,000 rise in part-time work.

This reallocation of labour not only reduced average hours worked, but also signalled a potential slowdown in job quality or employer confidence.

Labour force participation continued to expand, but job creation is failing to keep pace with population growth, and this is placing upward pressure on unemployment.

A rise in long-term unemployment would be particularly concerning, given its potential to erode skills and diminish future job prospects.

The current unemployment rate now sits above what we regard to be Australia’s natural rate (around 4 per cent) meaning some slack has emerged in the labour market.

This will be closely monitored by the Reserve Bank of Australia (RBA) in its upcoming monetary policy decisions. The RBA had already cut rates in May and February, responding to subdued inflation and weaker global growth.

The recent decision to hold rates to 3.85 per cent in July went against the predictions of many economics commentators – this correspondent included – but highlights the cautious approach the RBA is taking, and its preference against precipitous action.

The June jobs data adds to the case for another 25 basis point cut in August.

However, RBA Governor Michelle Bullock said the Board wanted to see the June quarter CPI data, due at the end of July before moving on a decision.

If inflation continues to track within the 2–3 per cent target band, the pressure to ease monetary policy further will grow.

Employment changes conceal greater churn in WA’s labour market opportunities

WA’s labour market, though still relatively strong, is showing signs of convergence with national trends.

The state’s unemployment rate rose to 4.1 per cent in June 2025, up 0.2ppt for the month and 0.4ppt over the year. This marks a clear upward trend from 3.3 per cent at the end of 2024, and the number of unemployed Western Australians has now exceeded 70,000 – up by 13,600 since December.

Both full-time and part-time jobs fell slightly in June (down 3,900 and 4,500 respectively), equivalent to around 0.5 per cent of WA’s total employment base.

While modest, these losses follow a period of relatively strong employment growth and may indicate a shift in momentum.

Industry-level trends tell a more complex story.

Mining employment surged by 20,300 over the past year, reflecting the strength of WA’s resource sector. However, construction employment declined by 12,300, a concerning sign given the state’s acute housing supply constraints.

This juxtaposition suggests a reallocation of labour toward mining and away from construction—a dynamic that may further constrain efforts to address housing shortages. It also highlights the structural vulnerabilities in WA’s labour market, particularly where sectors compete for the same skilled workforce.

Despite the rising unemployment rate, WA still maintains a relatively tight labour market. Employment growth over the past year (2.6%) remains among the strongest nationally, and job vacancies – while growing more slowly – remain elevated.

The upward drift in WA’s unemployment rate, however, has already overshot forecasts in the state’s 2025–26 Budget, which had projected an average of 3.75 per cent over the course of the 2025-26 financial year. If this trend continues, it could impact fiscal forecasts and drive a policy reassessment.