Australia's unemployment rate rose to 4.5% in July after employment fell by nearly 16,000 people, signalling further cooling in the labour market, according to the latest Australian Bureau of Statistics (ABS) data.
The number of employed people fell by 15,800 during the month, while unemployment increased by 4,000. The unemployment rate is now at its highest level since late 2021.
"The majority of the fall in employment came from males, which fell by 11,000 people," said Sean Crick, ABS head of labour statistics.
"There were 10,000 fewer males employed part-time, and 1,000 fewer in full-time employment in July."
Part-time employment drives decline
Female employment also fell, declining by 5,000 in July. However, the composition was different, with female part-time employment falling by 22,000 while full-time employment increased by 17,000.
The employment-to-population ratio declined to 63.9%, while the participation rate fell to 66.9%. Underemployment remained unchanged at 6.4%.
Total hours worked also declined by 12 million hours during the month. Full-time employees accounted for a seven million-hour reduction, while part-time employees worked five million fewer hours.
"There were 12 million less hours worked this month, with those employed full-time working seven million less hours, and those employed part-time working five million less hours," Crick said.
Unemployment varies across states
Victoria and Tasmania recorded Australia's highest unemployment rates in July, at 5.1% each.
Western Australia followed at 4.4%, while New South Wales and Queensland both recorded unemployment of 4.2%.
South Australia had the lowest unemployment rate at 4.1%, down 0.2 percentage points from June.
New South Wales and Western Australia recorded the largest falls in total hours worked, with both states reporting an eight million-hour decline.
ABS modernises Labour Force Survey
The ABS also provided an update on its Labour Force Modernisation project, which is expected to be completed by the end of September 2026.
The project will update the design, content, systems and tools used to collect Labour Force Survey data.
"From this time, all respondents will have an improved digital experience, and users will have greater access to labour force statistics, including more frequent insights on select topics," Crick said.
Labour market cooling puts RBA in focus
The weaker employment data adds to signs that Australia's labour market is losing momentum, potentially reducing pressure on the Reserve Bank of Australia to raise interest rates further.
The RBA recently kept its policy rate at 4.35% after three consecutive rate increases. The central bank has said the labour market has "eased somewhat" and expects unemployment to reach 4.5% by the end of the year.
Recent wage data has also pointed to a moderation in wage growth, reinforcing expectations that labour demand is cooling.
However, inflation remains a key factor for the RBA. A renewed acceleration in consumer prices could still put pressure on the central bank to consider further rate increases.