A tougher job hunt ahead? CommBank warns of 5.1% unemployment by 2027

Finding a job in Australia could become more challenging over the next year, with the country's unemployment rate expected to climb to 5.1% by the end of 2027. 

The number of people seeking work continues to outpace hiring demand, according to the Commonwealth Bank of Australia (CommBank).

The forecast, made by CommBank economist Harry Ottley in the bank's latest Wage and Labour Insights series, points to a gradual cooling of the labour market, with employment growth expected to slow further amid economic pressures and elevated workforce participation.

"Labour supply has continued to outpace demand, with participation around historically high levels, lifting the unemployment rate to 4.7% in September," Ottley said in the report. "We expect employment growth to slow further and the unemployment rate to keep rising, to a peak of 5.1% at end-2027."

CommBank's latest employment data showed that Australia added 18,000 jobs in October 2026, unchanged from September's figure, which was revised down from 20,000.

Although employment continues to grow, the pace suggests that businesses are becoming more cautious about expanding their workforces. With labour supply remaining strong, the gap between the number of people looking for work and available employment opportunities could widen.

"Labour demand remains somewhat resilient. But the easing at the margin is consistent with a slowing economy, with five rate hikes this year and falling housing prices weighing on activity," Ottley said.

Australia's unemployment rate stood at 4.7% in September 2026, according to the Australian Bureau of Statistics (ABS). The bureau also reported that a higher proportion of unemployed people were remaining out of work compared with recent years.

The expected rise to 5.1% by the end of 2027 could intensify competition among jobseekers, particularly if employers continue to moderate recruitment in response to economic uncertainty.

Alongside the unemployment forecast, CommBank's Wage and Labour Insights series found that monthly wage growth slowed in October to its weakest pace since December 2025.

Annualised monthly wage growth eased to 3.1% in October, compared with 3.5% in August.

"Our monthly measure on wages shows a clear slowdown and confirms the lift from the 4.75% Fair Work Commission award increase was short and sharp, with a noticeable but limited impact," Ottley said.

South Australia recorded the strongest wage growth among states and territories at 3.8%, up from 3.7% in September. Victoria recorded the slowest growth, with wages moderating to 2.9% from 3.0%. It has remained at the bottom of the state rankings for five consecutive months, according to CommBank.

The moderation in wage growth comes as the Reserve Bank of Australia (RBA) continues to monitor inflationary pressures and their potential impact on employee earnings.

Earlier this month, the central bank warned that inflation was expected to remain above 3% over the coming year, raising concerns that higher inflation expectations could become embedded in wages.

"Inflation is now expected to remain above three per cent for the coming year and there is an increasing risk that higher inflation expectations will become embedded," the RBA said.

However, Ottley said CommBank's data had not yet indicated that higher inflation expectations were translating into sustained wage increases.

"Our data shows no sign of that yet as we enter Q4 2026. That should provide some comfort for the RBA, though it has no shortage of other inflation concerns," he said.

With hiring growth losing momentum and more people remaining active in the labour market, Australia's employment outlook points to a potentially more competitive job market, where securing a new role could become increasingly difficult.