Fresh Australian labour force data surprised to the upside in December, with stronger-than-expected job gains pushing the unemployment rate lower, according to figures released Thursday by the Australian Bureau of Statistics (ABS).
The unemployment rate fell to 4.1% in December from 4.3% in November on a seasonally adjusted basis.
Employment rose by 65,200 over the month, with gains split between full-time employment, which increased by 55,000, and part-time employment, which rose by 10,000.
The result defied expectations of a modest easing in labour market conditions. Markets were expecting the unemployment rate to edge up to 4.4%, alongside employment growth of around 30,000 and a participation rate of 66.8%.
ABS head of labour statistics Sean Crick noted that younger workers played a key role in the stronger outcome. “This month we saw more 15–24 year olds moving into employment, contributing to the rise in overall employment and the fall in the unemployment rate,” he said.
Employment growth was driven primarily by men, with male employment rising by 49,000 people, while female employment increased by 17,000.
“The growth in employed people led to the participation rate rising slightly to 66.7%,” Mr Crick said. “This was despite a 30,000 person drop in unemployment.”
“The number of hours worked was up by 0.4%, in line with the 0.4% rise in employment,” he added.
“In December 2025, seasonally adjusted monthly hours worked reached a record high of over 2 billion hours for the first time.”
Measures of spare capacity in the labour market also improved. The underemployment rate fell by 0.5 percentage points to 5.7% in December, while the underutilisation rate declined to 10.1%.
“Fewer young people were underemployed in December, with the 15–19 year old underemployment rate falling by 2.1 percentage points to 17.4%,” Mr Crick said.
Across all age groups, male underemployment fell by 0.8 percentage points to 4.6%, while female underemployment edged down by 0.1 percentage points to 6.9%.
The participation rate stood at 66.7%, and total hours worked increased by 0.4% over the month.
The Reserve Bank of Australia’s monetary policy board said in December that “labour market conditions remained a little tight”, a view that adds to the risk that interest rates may need to rise.
The board also noted that signs of an unwinding in factors that had driven an earlier lift in unemployment had “reduced the risk of a material easing in labour market conditions”.
