Australia’s labour market is sending mixed signals for mortgage brokers and their clients.
The unemployment rate has ticked higher, yet strong employment growth and persistent labour shortages – particularly in construction – mean housing supply, wage pressures, and ultimately borrowing capacity stay in focus.
Australian Bureau of Statistics (ABS) figures show the number of people out of work rose in February even as overall employment increased.
“The number of unemployed people grew by 35,000, contributing to the 0.2 percentage point increase of the unemployment rate in February,” ABS head of labour statistics Sean Crick said in a media release.
Employment rose by 48,900 over the month, with gains concentrated in part‑time roles. Part‑time employment jumped by 79,000 while full‑time positions fell by 30,000, and total hours worked slipped 0.2%. The participation rate edged up to 66.9%, meaning more people were either working or actively looking for work.
Despite the lift in the headline rate, underlying momentum remains solid. Crick noted that “The trend unemployment rate fell marginally from a revised 4.3% in January to 4.2% in February,” with trend employment and hours worked both continuing to grow.
Meanwhile, economists at Westpac and CreditorWatch argue that these moves partly reflect seasonal quirks and a rebound in participation, rather than a sudden deterioration in labour demand.
In a Westpac analysis, economist Ryan Wells said the latest figures suggest that “employment growth is moving past its trough”, even as the jobless rate lifts back to around last year’s levels.
CreditorWatch chief economist Anneke Thompson described the release as “ambiguous employment data with employment strong and unemployment higher”, adding that it is “mainly useful as a baseline rather than a forward signal” ahead of the recent oil price shock.
For the housing and construction sectors, however, the key story is not slack demand for workers but the opposite.
“Demand for labour remains very strong with an additional 48,900 workers hired across the economy during February,” Master Builders Australia chief economist Shane Garrett said.
Garrett warned that “Without more workers, our industry cannot deliver the homes and infrastructure that we’re so short of,” highlighting estimates that construction needs many more workers to meet housing demand and infrastructure targets.
For borrowers, that translates into ongoing risks of project delays, higher build costs, and constrained new supply.
For brokers, a higher unemployment rate may raise questions from clients about job security, especially among more leveraged borrowers. However, the ongoing tightness in the labour market, particularly in construction and key service industries, is likely to keep wage and cost pressures high. That mix complicates the Reserve Bank’s task and supports a “higher-for-longer” outlook for mortgage rates.
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