Jobs fall as unemployment edges up to 4.5%

Labour MarketJobs fall as unemployment edges up to 4.5%

Employment fell 15.8k in July, a downside surprise after gains of 38.2k in May and 80.2k in June. Participation eased 0.1ppt to 66.9%, which trimmed the labour force by 11.7k and softened the blow.

• The unemployment rate ticked up to 4.5% from 4.4%, though the move was smaller than it looks, going from 4.43% to 4.46%. Labour supply keeps growing faster than employment, so unemployment is drifting higher.
• Hours worked fell 0.6% in the month and are up just 0.2% over the year, against employment growth of 1.3%. Firms are employing more people but giving them fewer hours, with average hours per worker down about 1.1%.
• Underemployment eased 0.1ppt to 6.4% but remains on a rising trend, up 0.7ppt so far this year. Total hours are down 0.4% year to date while employment is up 0.7% and the labour force up 1.1%. Some of this reflects softer demand and some reflects supply, as cost-of-living pressures and higher rates push more people to seek extra hours.
• Forward indicators are turning. The Q2 NAB survey showed year-ahead employment expectations down 9 points, the largest fall since the pandemic, a clear signal that hiring plans are cooling into the second half.
• The RBA lifted its Q4 unemployment forecast to 4.5% from 4.3% in the August Statement. Westpac is more downbeat, seeing 4.6% in Q3 and 4.8% in Q4. This looks like a market moving into spare capacity rather than one running tight.

Consumer ConfidenceConfidence rises 1.5pts

WagesPrivate-sector pay keeps cooling

• The Wage Price Index rose 0.8% in Q2 to be up 3.2% over the year, in line with forecasts and just below the RBA’s 3.3% projection.
• Private wages rose 0.7%, the smallest quarterly gain since late 2021, easing the annual pace to 3.1% from 3.4% six months ago.
• Public wages offset some of that, up 0.9% and steady at 3.4% over the year, led by state government roles and scheduled Commonwealth rises.

Foreign ExchangeAUD tops US$0.71 on a weaker greenback

• The Australian dollar pushed above US$0.71, an eleven-week high, and is on track for a fourth straight weekly gain as broad US dollar weakness outweighed a softer local jobs report.
• The greenback stayed under pressure as investors questioned whether the Treasury’s decision to double purchases of longer-dated debt offers lasting relief. Treasury yields rebounded, keeping the focus on the widening fiscal deficit and debt load.
• That weakness more than offset the domestic data, which showed employment falling and unemployment climbing to a near five-year high of 4.5%. The figures were not soft enough to rule out further tightening — markets still price around a 70% chance of a hike to 4.60% by early next year.
• A diplomatic deadlock in the Middle East has kept oil prices elevated, sustaining inflation risk and lending some support to commodity currencies. With the US dollar setting the direction for now, the Aussie has room to hold its gains, though further labour market softening is the main domestic risk to the rally.

Where We HelpNavigating commercial lending

Whatever stage your business is at, we structure lending across our 60+ lender panel to fit. Three broad categories of where we can help:

Sources: ABS Labour Force Survey (July 2026), ABS Wage Price Index (Q2 2026), RBA August 2026 Statement on Monetary Policy, Westpac Economics (Weekly, 14 August 2026), ANZ-Roy Morgan. This summary is for informational purposes only and should not be considered financial advice. Always consult a professional before making investment decisions.