Australia's labour market remained more resilient than expected in June, with employment significantly exceeding market expectations while the unemployment rate held steady at 4.4%. The result highlights ongoing strength in labour demand despite restrictive monetary policy, although rising underemployment suggests labour market conditions are gradually easing beneath the headline figures.
Employment increased by 76,000 in June, well above expectations of around 15,000, supported by a rise in the participation rate to 67.0%, its highest level in 13 months. Job creation was largely driven by part-time employment, with the underemployment rate increasing to 6.5%, signalling growing spare capacity despite the strength in headline employment. Labour market conditions also remain uneven across the country, with Victoria's unemployment rate rising to 5.1%, the highest since the pandemic and well above the national average, reflecting comparatively weaker economic conditions.
From a monetary policy perspective, the release reinforces the RBA’s cautious stance. June's stronger-than-expected employment outcome suggests the labour market remains more resilient than the RBA had anticipated, supporting concerns that wage growth and consumer demand could remain stronger than is consistent with achieving the inflation target. Reflecting this, bond markets have moved to fully price a further cash rate increase by December, up from around 79% prior to the release.
Nevertheless, the rise in underemployment and weaker forward-looking indicators, including NAB's June Business Survey, which recorded the sharpest decline in year-ahead employment expectations since the pandemic, suggest labour market conditions are likely to continue easing over coming quarters. Heightened geopolitical uncertainty following the renewed escalation in the Middle East also presents downside risks to business confidence and hiring intentions.
Overall, the June labour force data paints a picture of a labour market that remains resilient but is gradually loosening beneath the surface. While the strength in employment has increased expectations of further policy tightening, next week's June quarter CPI release is likely to be the key determinant of whether the RBA ultimately judges additional tightening to be necessary.
Source: Labour Force, Australia, June 2026.