Two sets of official figures landed this week, and together they paint a picture of a jobs market that is slowly cooling. For small business owners who have spent the past few years struggling to find and keep staff, that shift is worth understanding.

The jobs numbers

The Australian Bureau of Statistics released its July labour force figures today. In seasonally adjusted terms:

  • the unemployment rate rose to 4.5 per cent
  • employment fell by 16,000 people, while the number of unemployed rose by about 4,000 to 691,500
  • the participation rate slipped 0.2 percentage points to 66.9 per cent
  • the underemployment rate was 6.4 per cent
  • monthly hours worked fell by 12 million, across both full time and part time work

The wages numbers

Yesterday the ABS published the Wage Price Index for the June quarter. Wages rose 0.8 per cent for the quarter and 3.2 per cent over the year, down from 3.4 per cent a year earlier. Private sector wages rose 3.1 per cent over the year and public sector wages 3.4 per cent.

The ABS noted that almost four in five jobs, 79 per cent, had an annualised wage change of less than 4 per cent, and that fewer jobs are receiving the larger rises seen in recent years. Annual wage growth is now well below its late 2023 peak of 4.3 per cent, but still above the 2.2 per cent recorded just before the pandemic.

What it means for employers

One month of data is not a trend, and 4.5 per cent is still a low unemployment rate by historical standards. But the direction is reasonably clear: there are a few more people looking for work, a few less hours on offer, and pay rises are settling back into a narrower band.

  • Hiring may get a little easier. If you have had a role open for months, it may be worth readvertising.
  • Use the wage figure as a benchmark, not a rule. A 3.2 per cent average is a useful sense check for pay reviews. It does not replace your legal obligations. Award and minimum wage increases from 1 July still apply in full.
  • Watch your own demand. Falling hours across the economy can be an early sign of customers tightening up. Keep an eye on your sales pipeline and debtor days.
  • Update your cash flow forecast. Wages are usually the biggest cost in a small business. Re-run your budget with realistic pay rises and super at 12 per cent.
  • Look after good staff. A softer market does not make replacing a great employee cheap. Flexibility and training often matter as much as pay.

These figures also feed into the Reserve Bank's thinking on interest rates, so they are worth watching even if you are not hiring.

This article is general information only and does not take your personal circumstances into account.