Q3 Labour Account: care economy slowdown masks consumer-led upswing
Underneath the slowing in total jobs growth is a diverse set of industry narratives. As ‘care economy’ jobs growth has normalised from recent highs, there are nascent signs of a broadening pick-up in market sector jobs, particularly in consumer-facing industries.
For more charts and industry comparisons: Westpac Chart Pack – Q3 Labour Account
Overview
The number of filled jobs posted its largest gain in a year, lifting by 107.6k in Q3 after a meagre gain of just +52k over the first half of the year. Despite the lift in Q3, annual growth slid to 1.2%yr, the weakest pace since 2017 outside of the pandemic. We note that this weaker growth pace is largely due to a stronger base of comparison, given the same quarter last year reported a chunky gain of +185k.
Based on this, and how current industry trends are tracking, we could be currently looking at the trough for jobs growth. As discussed in more detail below, jobs growth in the care economy has largely normalised from recent highs, and there are early signs that the pick-up in private demand is starting to translate into stronger hiring efforts across households and personal services. That said, there is still some way to go in terms of a broader lift in hiring taking hold across the rest of the market sector, and there is a risk that care economy jobs slow a bit further, so much of this will be determined by how these dynamics continue to unfold.
There were also some significant revisions to the quarterly pattern of jobs growth and to which industries they are attributed to, but the net change in overall jobs growth was minimal (–3.5k over the year to June 2025).
Growth in main jobs was solid, up +67.3k (+0.5%), a firmer result than the quarter-average gain in headline employment reported in recent household labour force surveys (+0.2%). This suggests that the broader suite of data sources utilised by the ABS in compiling the Labour Account, which includes other ABS business surveys, found that more jobs were added in the quarter.
Secondary jobs tend to be a bit more volatile, with the latest quarter reporting a bounce-back of 40.3k (3.8%) after a chunky decline of –54.0k (–4.9%) over the first half of this year. As a result of the latest move, the multiple job holder rate ticked slightly higher, from 6.4% to 6.5%. While this is below the peak of 6.7% in 2023, it is still well above the pre-pandemic average of 5.7%.
Industry Insights
At the core of the gradual slowdown in total jobs growth is a broad normalisation of industry dynamics. Most notably, health care and social assistance, which represents around 16% of all jobs, continues to moderate from its staggered pace over recent years. The latest quarter saw a gain of about 21.6k in Q3, about half of the quarterly average gain from 2022 to 2024, leaving the annual growth pace at its lowest since March 2014, at 1.4%. Additionally, recent revisions have lowered the estimated number of jobs added in the sector by around –100k. As we highlighted last year, the return to more sustainable rates of growth was to be expected.
Meanwhile in the market sector, jobs growth is staging a solid recovery, in line with the evidence of a pick-up in private demand. There is a diverse set of industry narratives underneath the broader market sector trend, however.
Against the backdrop of a trend improvement real disposable incomes and consumer spending, jobs growth within household and personal services is starting to turn higher. This is particularly evident in accommodation and food services, lifting 13.1k in Q3 to be up around 4.5%yr. Revisions have also added an extra +117k to jobs growth to this industry as well. Growth in arts and recreation and other services is also moving more decisively into positive territory, up +2.8k (1.7%yr) and 7.8k (2.9%yr) respectively. It also looks are also looks as though retail trade is starting to turn a corner, posting its first meaningful lift in jobs in about a year, up +8.8k.
On the production side of the economy, results were generally positive. Another solid lift in construction jobs, up +20.5k (3.6%yr) corroborates the evidence of an uplift of building activity associated with dwellings, energy and IT infrastructure. Lifts in mining and agriculture, forestry and fisheries were also a welcome development given the string of recent declines. But it is worth noting that the results around manufacturing provide some reason to remain cautious about the breadth of the upswing at this early stage, as it continues to report declines in jobs, down –3.1k (–2.7%yr) in Q3.
The general picture for jobs growth in the business services segment remains somewhat lacklustre, however. We are seeing a decent pulse in financial and insurance services and administrative and support services, both industries extending recent gains to be up 2.7%yr and 0.8%yr respectively. However, jobs in professional, scientific and technical services dipped –3.3k in Q3 and is only slightly positive on an annual basis (0.3%yr). The upswing in household spending is still in its early stages, so it may be some time before it flows downstream through to sustained jobs growth in the business services sector.
Productivity is recovering as expected
The Labour Account provides the complete industry detail on hours worked, allowing us to calculate compare labour productivity performances across sectors. The latest estimates were in line with our forecasts, which continues to emphasise that the ‘abnormal’ weakness in Australia’s productivity performance in recent years is fading as sector-specific factors normalise.
As discussed in our summary of the national accounts (see here), growth in total labour productivity has lifted to 0.8%yr, already above the RBA’s medium-term assumption of 0.7%yr. The recent expansion in the care economy – a services-dominated sector which, on average, has a lower level of labour productivity compared to more capital-intensive parts of the economy – has weighed significantly on aggregate labour productivity growth over this period. Now, with hours worked growing more consistently across other segments of the economy, the non-market sector’s drag on productivity is gradually abating. And encouragingly, even within the non-market sector, productivity growth is no longer declining as rapidly as before.
Significant swings in mining sector productivity have been an additional complicating factor, masking the underlying productivity performance for the market sector as a whole. Looking past this volatility, productivity in the market (ex-mining) sector is growing at an annual pace of 1.5%yr. This, together with the moderation in the sector’s unit labour costs to 3.3% on a six-month annualised basis, provides a more constructive signal on supply capacity and cost pressures.
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