Australian Labour Market Update

Australia’s unemployment rate remained low by historical standards, easing to 4.4% in May and holding steady in June after reaching 4.5% in April, marking the highest level observed since November 2021. Over the June quarter 2026, the unemployment rate averaged 4.4%, slightly above KPMG’s estimate of the NAIRU. The June unemployment rate was 0.1ppt higher than the corresponding period of 2025, highlighting the strength of the labour market.

Employment growth remains positive, employment increased by 0.5% in the quarter and 1.7% over the year, while the number of filled jobs increased 0.6% in the quarter and 1.9% through the year. However, job vacancies declined in the three months to May 2026 for the first time since August 2025. This points to a gradual easing in labour demand, with falls across both the public and private sectors, as well as in most states and industries.

Wage growth remained stable in the March quarter 2026, with the Wage Price Index increasing 3.3% over the year. However, real wage growth turned negative in the March quarter 2026, falling to -0.7% as inflation accelerated. Ongoing weakness in productivity growth is likely to constrain the pace of sustained gains in real wages.

 
Recent changes to award and minimum wages are expected to support lower-paid workers but may also add to cost pressures for businesses already operating in a challenging economic environment. KPMG forecasts wage growth to remain broadly stable over the next two years while inflation is anticipated to remain elevated.