Australian unemployment rate remains steady as labour market shows signs of a slowdown
The number of those in full-time employment decreased while part-time work increased in December
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The unemployment rate remained at 3.9 percent in December, indicating a continuing tight labour market that was now starting to slow, according to the Australian Bureau of Statistics (ABS). In seasonally adjusted terms, employment decreased by 65,000 people overall to 14,201,100. Full-time employment fell by 106,600 to 9,791,200 people. Part-time employment increased by 41,400 to 4,409,900 people.
“The strength in employment in October and November and the fall in December reflected changes in the timing of employment growth in the last few months of 2023, compared with earlier years,” said David Taylor, ABS head of labour statistics.
Gareth Aird, CBA head of Australian economics, said this reflected the adoption of Black Friday sales events in the Australian retail sector, which had shifted long-term hiring and spending patterns.
“The growing popularity of Black Friday sales has now meant a lot more hiring is done in the month of November rather than December,” Mr Aird said. “This is a recent phenomenon.”
The employment-to-population ratio and participation rate both hit record highs in November. Both measures slipped by 0.4 percent in December. The employment-to-population ratio fell to 64.2 percent and the participation rate fell to 66.8 percent.Underemployment – which measures the portion of workers who would like to work more hours if they could – remained at 6.5 percent.
Mr Taylor said: “In trend terms, many of the key indicators still point to a tight labour market. However, the increasing unemployment rate since November 2022, along with the rising underemployment rate and slowdown in the growth of employment and hours worked, suggest that the labour market is starting to slow.”
In November 2022, the seasonally adjusted unemployment rate was 3.5 percent. Mr Aird said the increase since then to 3.9 percent today indicated the labour market was loosening.“Other indicators of the labour market also capture its loosening,” he said. “Jobs growth over the past six months has all been in the part-time space. Seek jobs ads in December … were down by 17.4 percent over the year. And the number of applicants per job ad continued to march higher in November. Applicants per job ad were up by 81.1 percent over the year to November.”
Movements in the unemployment rate are a key factor considered by the Reserve Bank board when making interest rate decisions. The next decision will be announced on 6 February. Mr Aird said CBA expected the unemployment rate to gradually lift over 2024 to end the year at 4.5 percent. “We believe RBA rate cuts will be required this year to prevent the unemployment rate from rising much above 4.5 percent. Our base case sees the RBA commence an easing cycle in September.”
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The federal budget has rattled property investors. But the biggest mistake isn’t the tax changes, it’s the conclusion many are drawing from them.
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The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
The budget has changed the settings. It has not changed the fundamentals.
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