Around 76,300 Australians gained a job in June, well above market expectations, while the unemployment rate held steady at 4.4% .
Author
- Stella Huangfu
Associate Professor, School of Economics, University of Sydney
That’s because the participation rate – which measures the share of working-age Australians either working or looking for work – jumped to 67% in June from 66.7%. People aged 55-64 had the largest annual growth in the participation rate, up 0.8 percentage points to 70.6%.
That combination of more people in new jobs, balanced by more people also looking for work, kept the unemployment rate unchanged.
With inflation figures due out next Wednesday, today’s jobs update is one of the last major releases of economic data before the Reserve Bank of Australia’s August meeting to decide on whether to change interest rates. Together, they’ll provide important snapshots of the economy before the RBA announces its rates decision on August 11.
The strength in the labour market suggests it may prove resilient to any further interest rate rises. Following the jobs news, financial markets increased their expectations of a rate rise in August to more than one in three.
How the jobs market has changed in 2026
Unemployment has risen slightly over the past six months, up from 4.1% in December last year.
But the latest figures confirm businesses are still hiring and employment has continued to grow in Australia, albeit at a slower pace than during the post-pandemic rebound.
Employment has held up despite three rate hikes this year from the RBA, as well as subdued economic growth .
Looking back over the past six months, unemployment has remained around the mid-4% range, still lower than the average over the past century of 4.9% .
This suggests employers remain reluctant to shed staff after recent labour shortages. Strong migration has expanded both labour supply and labour demand, while participation remains close to record highs.
Taken together, the first half of 2026 points to a labour market that is gradually normalising, rather than weakening sharply.
For policymakers, this is close to the ideal outcome : labour demand is easing enough to reduce inflationary pressure, without causing a significant deterioration in employment – and hurting job seekers.
Underemployment and other signs to watch
The unemployment rate remains the headline measure, but it is unlikely to provide the earliest signal if labour market conditions soften over the coming months.
One indicator to watch is underemployment , which measures people who want to work more hours. The underemployment rate rose to 6.5% in June , up from 6.3% in May.
Because employers often reduce hours before reducing headcount, underemployment and hours worked can provide earlier signals of weakening labour demand than the unemployment rate.
Youth employment – typically referring to Australians aged 15-24 – is another useful indicator.
Younger workers are more likely to be in casual or temporary jobs, or entering the workforce for the first time. Employers often reduce hiring before cutting jobs, so young people are usually among the first to feel the effects of a slowing labour market.
A sustained rise in youth unemployment could therefore provide an early warning sign for others.
Women’s labour force participation also deserves attention. Strong participation among women – at 63.3% in June, up from 62.9% – has been supported by childcare reforms, strong labour demand and greater workplace flexibility.
Whether it remains elevated will provide another gauge of the labour market’s underlying strength.
What it means for interest rates
While the market is widely tipping at least one rate rise before the end of this year, I’m not yet convinced the RBA will lift rates again.
But today’s monthly labour force report will be carefully considered by the RBA board when it makes its interest rate decision in August .
The RBA’s objective is to return inflation sustainably back to its 2-3% target range, while preserving as much of the strength in the labour market as possible. Labour market data matters, because it provides information about spare capacity, wage pressures and underlying inflation.
Getting back to the RBA’s inflation target won’t be easy, given Australia is still well above that range now. Underlying inflation rose to 3.6% in May .
And there’s little sign that those cost-of-living pressures will ease soon, especially with the Middle East war once again pushing oil prices higher .
The June quarter inflation figures – which the RBA board will be anticipating more than this unemployment update – are due out next week. It would be surprising if there’s much good news on that front.
In its most recent May outlook, the RBA said it expected underlying inflation “to remain above 3% until mid-2027, as fuel-related cost increases are passed through to consumer prices”.
On its own, these new employment figures are unlikely to materially alter what the RBA decides on interest rates. But they do reinforce the view that Australia remains on course for the “soft landing” policymakers have been seeking: a gradual easing in inflation, while preserving a relatively resilient jobs market.
