Small businesses are contributing to a resilient labour market as Australia’s unemployment figure holds steady at 4.4 per cent in a subdued economy.
The Australian Bureau of Statistics reports 76,000 people found employment last month, far exceeding economists’ expectations of around 15,000 new jobs. The figure includes 47,000 new part-time roles. The Reserve Bank will take the surprise result into consideration as it weighs up whether to raise interest rates in August.
“While SMEs have spent much of the year balancing workforce needs against rising operating costs, the June result suggests employers are still finding opportunities to invest in their workforce and support growth where demand exists,” says Employment Hero APAC Managing Director James Keene.
The Data Beneath The Steady Unemployment Figure
While the unchanged figure suggests stability, surrounding data tells a more nuanced story.
“Part of the growth in employment this month came from those who were waiting to start a job in May. This represents a stronger June movement than has been observed in recent years. We also continued to see higher numbers of people remaining employed this June, following elevated levels in the recent few months,” says Sean Crick, ABS head of labor statistics.
With people choosing to remain in jobs and new jobs being created, the participation rate has risen by 0.3 percentage points to 67.0 per cent. But the underemployment rate — people who have a job but want more hours — has also risen, up 0.2 per cent to 6.5 per cent.
Hours worked have risen by 0.2 per cent over the month. Broken down further, full-time hours remain flat but part-time hours are up 1.2 per cent. This suggests that while demand for labour is still there, employers are meeting it using existing teams where they can.
Demographic Trends At Either End Of The Workforce
Australians aged 55 to 64 have recorded the largest annual growth in participation of any age group, up 0.8 percentage points to 70.6 per cent over the year. There is a notable demographic trend in the June data.
The data does not shed light on whether this is by choice or if older workers are delaying retirement due to higher living costs. For small business owners, this trend expands the available talent pool, particularly for roles where experience matters more than long-term tenure.
Small and medium businesses are also hiring strongly at the other end of the spectrum. “Our Jobs Report research suggests that SMEs are increasing investment in entry-level employees, with 18-24 year olds leading both employment and wage growth across the country,” says Keene.
Keene says some of that hiring activity can be linked to AI. “We also know that businesses with advanced AI adoption are growing entry-level headcount at more than double the rate of organisations with limited or no AI adoption, pointing to the opportunities for younger workers across Australia with AI literacy and adaptability,” he explains.
A Resilient Labour Market May Lead To Higher Interest Rates
For small business owners, the June unemployment data reinforces that while it remains tight, the labour market is becoming more balanced. Skilled workers are still in demand, but businesses are not competing as fiercely for candidates as they were two years ago.
“Genuine weakness appears to be forming,” says Westpac economist Ryan Wells. “On a three-month average basis, employment is growing well below the pace of the working-age population.” Consumer spending is still soft and NAB‘s latest business survey suggests employers are planning to add staff more cautiously over the coming year.
“We remain comfortable with our view that slow employment growth will see a further rise in unemployment over the rest of the year,” says Wells.
In the interim, however, the Reserve Bank will consider unemployment figures alongside next week’s CPI data as it determines whether to increase interest rates at its August 11 meeting. The bank may see a stronger labour market as leading to higher wage growth, which would threaten to increase inflation at a time when it is trying so hard to bring it under control.
For SMEs, the priority may be to continue with the selective approach to hiring, and maintain the flexibility to adapt if the economy softens further or borrowing costs remain higher for longer.
