The monthly jobs figures can move markets and shape interest rate decisions. Here’s how Australia’s unemployment rate is calculated, what it leaves out, and why the Reserve Bank watches it so closely.
The unemployment rate is the percentage of people in the labour force who are unemployed.
The labour force includes everyone aged 15 and over who either has a job or is actively looking for one. People who aren’t working and aren’t looking, such as many retirees, full-time students and full-time carers, aren’t counted in the labour force at all.
How it’s measured
The Australian Bureau of Statistics releases the figures every month in its Labour Force survey. It’s based on interviews with people in about 25,000 households, covering roughly 50,000 people, with households staying in the survey for eight months.
To count as unemployed, a person must not have worked at all in the reference week, must have actively looked for work in the past four weeks, and must be available to start.
To count as employed, a person needs to have worked for at least one hour in the reference week. That definition follows international standards, but it’s often criticised for making unemployment look lower than it feels.
Underemployment
That’s why economists also look at underemployment: people who have a job but want, and are available for, more hours.
Adding together the unemployed and the underemployed gives a broader measure of spare capacity in the jobs market, known as underutilisation.
Other measures
The participation rate shows the share of working-age people who are in the labour force. It can rise when strong job opportunities draw more people into work.
The employment-to-population ratio shows the share of people aged 15 and over who have a job.
Because the survey is a sample, monthly figures can jump around. Economists often focus on the trend over several months.
Recent trends
Australia’s unemployment rate fell to around 3.5% in 2022 and 2023, near its lowest in almost 50 years. It has since risen gradually, reaching 4.7% in September 2026, a five-year high.
Why it matters
The Reserve Bank watches unemployment closely. Very low unemployment can push up wages and inflation, as businesses compete for workers. Rising unemployment can signal that the economy is slowing and inflation pressures are easing.
Economists sometimes refer to the lowest unemployment rate the economy can sustain without pushing up inflation. The Reserve Bank’s estimates of that level, which can’t be measured directly, have been around 4.5%.
For households, unemployment is one of the most important measures of economic wellbeing, because losing a job affects income, mortgage repayments and spending.
