Unemployment trending up, but job market remains tight

Broad measures of labour underutilisation have increased over the course of the year as the economy has slowed, according to the latest Statement of Monetary Policy from the Reserve Bank of Australia (RBA).

Nevertheless, the job market remains strong, which means the data is giving mixed signals:

• Unemployment and underemployment have drifted higher during 2023 – but they're still lower than the long-term averages.
• The ratio of job vacancies to unemployed people has declined from its 2022 peak – but it's still high.
• Job switching has declined – but the share of people voluntarily quitting their jobs remains above pre-pandemic levels.

As a result, the labour market remains tight and “finding suitable workers continues to be difficult” for businesses.

One interesting trend the RBA has observed is a change in the nature of how businesses are choosing to employ people.

“Employment growth has increasingly been driven by part-time employment in recent months. This contrasts to patterns observed during the recovery from the pandemic, when full-time employment accounted for almost all employment growth. Relatedly, average hours worked have declined a little recently and are expected to remain a key margin of adjustment as labour demand eases further,” the RBA said.

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