A weak Australian labour market report for November has given markets something to think about following their hawkish repricing of the RBA rates outlook for two rate hikes in 2026. Employment fell by 21.3k in the month, defying expectations for a 20k rise, with falling labour force participation (66.7%) the only variable that prevented the unemployment rate (4.3%) from rising.
By the numbers | November
- Employment posted its weakest result in 9 months falling by 21.3k in November, a large miss on expectations for a 20k rise. This followed a 41.1k increase in October, revised from 42.2k.
- Australia's unemployment rate was unchanged at 4.3% against expectations for a rise to 4.4%. However, the underemployment rate increased from 5.7% to 6.2% (13-month high), pushing up labour force underutilisation from 10.1% to 10.5% - its highest reading since August last year.
- Labour force participation declined from 66.9% in October (revised from 67%) to 66.7% in November. The employment to population ratio fell from 64% to 63.8%.
- Hours worked stalled in November (0%) following gains of 0.5% in September and 0.4% in October. Annual growth fell from 2.1% to 1.2%.
The details | November
The upbeat result for employment in October (41.1k) has proved short lived, falling back by 21.3k in November. This was the 4th decline in monthly employment this year and its weakest result since last February (-62.2k). Full time employment fell by 56.5k, giving back all of October's gain (53.6k); however, part time employment rose by 35.2k, more than rebounding its 12.5k decline last time out. Employment gains over the 3 months to November averaged just 10.3k.
Despite employment falling (-21.3k), the unemployment rate was able to remain unmoved at 4.3%. This was due to a surprisingly large fall in the participation rate from 66.9% to 66.7% that saw 23.4k people exit the labour force - the largest reduction seen in 9 months. Meanwhile, the employment to population ratio - the share of people in work - eased from 64% to 63.8%.
The real weakness was beneath the surface. The broader underemployment rate (including unemployed workers and employed workers wanting more hours) rose sharply from 5.7% in October to 6.2% in November, a 13-month high and more reflective of the weakness in employment. This drove total labour force underutilisation (combining unemployment and underemployment) to a 15-month high at 10.5% from 10.1% previously.
Hours worked slowed to the point of stalling (0%) in November, coming off the back of consecutive gains in September (0.5%) and October (0.4%). Over the year, hours worked lifted by 1.2% - but that has been heavily driven by part time workers (4.5%Y/Y) with growth in full time hours subdued (0.6%Y/Y).
In summary | November
Today's report continued the run of volatile labour force prints, making the underlying conditions hard to read with any precision. What is clear is that employment growth has slowed through the past year, outpaced by growth in the labour force. This dynamic has put upward pressure on the unemployment rate, though at 4.3% it still remains at a historically low level.
