Australia added 76,300 jobs in June yet underemployment rose to 6.5 per cent

Australia's labour force survey for June 2026, published by the Australian Bureau of Statistics on 23 July, recorded one of the largest monthly employment gains in years and, in the same month, a rise in the share of workers who cannot get the hours they want. Employment rose by 76,300 in seasonally adjusted terms to 14,823,300 people. The underemployment rate rose by 0.2 percentage points to 6.5 per cent. The second number attracted far less attention than the first.

Of the June gain, 47,000 was part time work and 29,300 full time. The unemployment rate held at 4.4 per cent, but the count of unemployed people rose by about 13,000 to 686,800. Unemployment and underemployment together, the underutilisation rate, reached 10.9 per cent. Monthly hours worked rose by about 5 million to 2,014 million, roughly a quarter of one per cent, against an employment rise of half a per cent. Over the year, the ABS put employment growth at 1.7 per cent and hours growth at 1.8 per cent.

The jobless rate did not fall because the labour force grew alongside employment. The participation rate rose 0.3 percentage points to 67.0 per cent, and 81.1 per cent for people aged 15 to 64. Sean Crick, the ABS head of labour statistics, said part of the growth came from people who had been waiting in May to start a job, and that this was a stronger June movement than had been seen recently. Participation among people aged 55 to 64 reached 70.6 per cent, up 0.8 percentage points over the year, the largest annual rise of any age group.

Eight days later, on 31 July, the ABS published its u-series, a separate framework that measures underutilisation both by headcount and by hours. On that basis the June underemployment rate was 4.2 per cent, the reduced employment rate 2.4 per cent, and the broad underutilisation rate 10.2 per cent. Measured in hours instead of people the picture contracts sharply: an underemployment volume rate of 1.4 per cent and a total underutilisation volume rate of 5.8 per cent, which the ABS described as just under 32 million hours of available but unused labour supply in the month. Two official instruments, published a week apart, therefore give underemployment rates of 6.5 per cent, 4.2 per cent and 1.4 per cent, depending on whether you count people who want more hours, people whose hours fall short of a defined benchmark, or the hours themselves.

Analysts did not agree on what the slack meant. Westpac's economics unit, writing on the release date, put the underemployment ratio at 6.8 per cent, the highest in more than two years, and argued the slack was accumulating through stronger labour supply rather than weakening employment, with participation surprising to the upside. Stella Huangfu of the University of Sydney, writing in The Conversation on 23 July, made the opposite emphasis: underemployment is the earlier warning because employers commonly reduce hours before they reduce headcount.

Several forecasters read the June figures as pointing to another interest rate rise. In ABC coverage on the day, Diana Mousina of AMP expected a further 0.25 percentage point increase in August, taking the cash rate to 4.6 per cent, conditional on inflation. David Bassanese of BetaShares suggested rising participation could reflect cost of living pressure pushing people into work. Harry McAuley of Oxford Economics Australia expected unemployment nearer 4.6 per cent by the end of the year.

That is not what the Reserve Bank did. On 11 August the Monetary Policy Board left the cash rate target unchanged at 4.35 per cent, unanimously, after three increases earlier in 2026. Its statement said labour market conditions had eased by a little more than expected in recent months, while leading indicators pointed to only limited easing in the near term. The accompanying Statement on Monetary Policy carried a forecast of unemployment rising to 4.8 per cent by June 2028. Governor Michele Bullock told her media conference that this did not mean mass job losses, saying employment was still growing but that it was taking longer for people to find work, and that a little less tightness in the labour market was needed to bring inflation down.

What remains unresolved is whether June was a turn or a wobble. A single month of survey data carries sampling error, and the June gain was partly mechanical, drawn from people who already had jobs waiting. Neither the ABS nor the Reserve Bank has said how much of the added participation is people entering work by choice and how much is people entering because their household budget requires it, and the u-series is too new to establish where its readings sit against past cycles. The July survey will show whether part time work continued to carry the growth.