Preview: Australia’s jobs market cooling as unemployment set to rise modestly (muted AUD)

Australia’s jobs market looks set to remain broadly resilient even as the unemployment rate edges higher, according to the country’s major banks ahead of Thursday’s labour force data.

Commonwealth Bank expects a 20,000 rise in employment in August, with the participation rate steady, leaving the jobless rate unchanged at 4.2%. But it cautioned the figure could round up to 4.3%, given July’s rate sat at 4.24%. The release will also include the first-quarter 2025 population update.

Westpac struck a softer note, saying the labour market is re-entering a period of gradual weakening similar to a year ago. It has pencilled in a 15,000 increase in jobs, but sees the unemployment rate lifting back to 4.3% as momentum in the health and care sectors cools. “Employment growth has eased to a three-month average pace of 2% — not weak, but heading that way,” the bank said.

JP Morgan economists said a jobless rate of 4.3% would be in line with the Reserve Bank of Australia’s forecasts and therefore unlikely to shift the policy outlook. But they warned there is little room for further deterioration without prompting a more dovish tone from the RBA. Overall, they described the labour market as in balance, with jobs growth tracking population growth.

National Australia Bank also emphasised balance, noting that demand indicators remain healthy. While the care economy drove hiring in recent years, growth in that sector has now stalled, creating scope for the private sector to absorb new workers without re-igniting inflation pressures. “The labour market remains near balance and has not been a source of upward pressure on inflation over the past year or so,” NAB said.

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A jobless rate at 4.3% in line with RBA forecasts likely leaves AUD muted

• for fixed interest, limited impact is expected as the data aligns with RBA projections; dovish risk if softening deepens
• for equities, a balanced labour market suggests wage-driven inflation pressure remains contained.

This article was written by Eamonn Sheridan at investinglive.com.