Australia’s August labour force data revealed a paradox: strong employment growth alongside rising unemployment. The labour market is being stretched by a surge in labour supply, with near-record participation bringing more Australians into the workforce than employers can absorb. This suggests that rising unemployment is being driven primarily by expanding labour supply rather than a contraction in employment.
Employment increased by 39,500 in August, more than reversing July’s 15,900 decline and exceeding market expectations. Total employment reached 14.84 million, with annual growth of 1.6%. Monthly hours worked also rose by 13.7 million, reaching 2,009 million hours, indicating continued demand for labour.
Despite these gains, the unemployment rate climbed from 4.5% to 4.6%, its highest level since late 2021. The number of unemployed Australians increased by 28,200 to 722,900, representing a 12.4% annual increase. Youth unemployment also rose by 0.4 percentage points to 10.8%, highlighting growing pressure among younger jobseekers.
The key driver was a sharp increase in workforce participation. The participation rate rose 0.2 percentage points to 67.1%, approaching its 115-year high of 67.2% recorded in January 2025. This expanded the labour force by approximately 67,700 people, significantly outpacing employment growth and pushing the unemployment rate higher despite solid hiring.
