Job vacancies fell by 9.2k (-2.7%) between May and August, reversing the gains recorded last quarter. Today’s data provides further evidence that the labour market is re-entering a phase of gradual softening.
Job vacancies fell by 9.2k (-2.7%) between May and August, reversing the gains recorded last quarter (revised down from +9.5k to +9.2k). The outcome was notably weaker than our forecast of a -0.5% decline, which was based on monthly supplementary data on job vacancies and advertisements. Vacancies have broadly stabilised over the past year, remaining within a range that is 40–50% above pre-pandemic levels.
The vacancy-to-unemployment ratio—a key measure of labour market tightness closely monitored by the RBA—continues to trend lower. It currently sits at 0.51, down from 0.55 in Q2, marking its lowest level since early-2021. That said, it remains well above the 0.2–0.35 range that prevailed in the decade prior to COVID.
Today’s data reinforces our view that the labour market is re-entering a phase of gradual softening. Our baseline expectation remains for the unemployment rate to edge higher and employment growth to slow through the remainder of 2025 and into 2026. We expect the unemployment rate to see a modest lift to 4.4% by end-2025 and 4.5% end-2026.
The decline in vacancies was driven by the private sector, where vacancies fell 3.4% over the quarter and 2.6% over the year. The 10k drop in private sector vacancies fully offset the gains made in May. In contrast, public sector vacancies rose for the fourth consecutive quarter, increasing by 2.1%. On an annual basis, public sector vacancies are up 7.2%.
Industry-level data showed that 11 of the 18 industries recorded a decline. The largest percentage falls were in other services (-20.3%), which also posted the steepest annual decline and is now at a five-year low. This was followed by financial & insurance services (-15.3%) and mining (-14%).
Among industries with rising vacancies, gains were concentrated in retail trade (13.4%), wholesale trade (11.4%), and manufacturing (9.7%). Notably, manufacturing vacancies have surged 46% over the past year—more than double the rate of the next strongest industry. The result is slightly more subdued in level terms (6.8k and 6.0k respectively). The latest (PDF 1MB) ACCI-Westpac survey reported that manufacturers continued to report difficult in sourcing labour but pressures are easing.
Several industries have now returned to pre-pandemic levels. These include administrative & support services (which includes work hire firms), financial & insurance services, other services, and information, media & telecommunications — all of which are comfortably within their 2015–19 ranges. Construction and wholesale trade are also nearing pre-pandemic levels, which is encouraging for the construction sector given its post-COVID challenges and suggests that capacity pressures continue to ease in the industry.
It’s important to note that many non-market jobs are within the private sector. Given that much of the post-COVID jobs growth has been driven by the non-market sector and we’re expecting an ongoing rebalancing, it’s useful to compare vacancy trends across market and non-market segments. Market sector vacancies have zig-zagged over the past year and are up just 0.1%, whereas non-market vacancies have declined 6.2%, adding further evidence that a rebalancing between the two is underway.
Over the past two quarters, the non-market sector has been the primary driver of the overall decline in vacancies (on a year-ended basis). Within this, the weakness has almost solely been driven by the healthcare & social assistance industry.
As we’ve highlighted previously, vacancies should not be viewed in isolation. They are a stock measure that naturally scales with the size of the economy and labour force—both of which have expanded significantly since the pandemic. The Beveridge Curve, which maps the relationship between the vacancy rate (vacancies as a share of the labour force) and unemployment, helps illustrate this dynamic. The labour market has been operating along the steep portion of the curve, where sharp declines in vacancies do not necessarily translate into rising unemployment, but it has been gradually shifting lower. If total labour demand continues to ease as expected, we anticipate further downward movement along the Beveridge Curve. Based on our current forecast for the unemployment rate to reach 4.4% by the year-end, this would be broadly consistent with the vacancy rate easing to a little under 2% (from 2.1% currently)
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