Quick Bites | Australia still growing, albeit at slower pace

Quick Bite – Australia still growing, albeit at slower pace

On Thursday 19 June, the ABS released three reports covering population growth, labour participation and the unemployment rate. Let’s briefly review what they told us.

First, to the population data. Australia’s population grew by 1.7% in 2024, according to the latest figures. Our population at 31 December 2024 was 27.4 million people, an increase of 446k on Dec 2023.

There were 594,900 people arriving from overseas and 254,200 departures, leaving 340,800 people added to our population from overseas migration. Natural increase (births minus deaths) added 105,200 people (up 1.9% from 2023). Of the states, WA had the fastest rise in population growth, up 2.4%, followed by Victoria and Queensland, which both grew by 1.9%, and Tasmania saw the slowest growth over the 12-month period (with +0.3%).

Source: McCrindle

Now to the labour data. The seasonally adjusted unemployment rate remained at 4.1% in May. Despite employment falling by 2,000 people last month, it’s up 2.3% compared to May 2024, which is stronger than the pre-pandemic, 10-year average annual growth of 1.7%. This fall in employment, combined with a drop in unemployment of 3,000 people, meant that the unemployment rate remained steady at 4.1%.

The employment-to-population ratio fell 0.1% to 64.2%, and the participation rate fell 0.1% to 67.0%. Despite the slight fall in the employment-to-population ratio in May, the female employment-to-population ratio rose 0.1% to a record high of 60.9%.

Hours worked increased 1.3% in May, following lower levels in the previous two months coinciding with the Easter holiday period and severe weather disruptions.

Unemployment stable at 4.1%

Source: Goldman Sachs

Australian unemployment rate over last 10 years

Source: Trading Economics

In terms of policy implications, we think there is a reasonable prospect that the RBA will cut 25bp at its next meeting on 8 July, probably followed by cuts in August and November to a “terminal rate” of 3.1%. In our view, Australia’s labour market is no longer particularly stretched and so is not contributing meaningfully to wage pressures or inflation. Markets will welcome lower interest rates as households with mortgages have been under severe pressure over the past 2 years.