Key Highlights

  • Employment is forecast to keep growing at a little over 1% through 2027.
  • Unemployment is forecast to drift up to 4.6–4.7%, with underemployment also rising.
  • The forecasts are national averages, were finalised before the September rise and will be updated.

The Reserve Bank's August projections point to a job market that keeps adding positions through 2027 but gradually becomes more competitive, with unemployment and underemployment both edging higher.

For people who expect to be job hunting next year, the Reserve Bank of Australia's (RBA) economic forecasts offer a broad-brush picture of the conditions they may face. The forecasts do not describe individual industries, regions or occupations, and they are not predictions about any one person's prospects. But they do set out how the RBA expected the labour market as a whole to evolve.

Those projections were published in the August 2026 Statement on Monetary Policy (SMP) and finalised on 5 August — before the Monetary Policy Board raised the cash rate target by 25 basis points to 4.60% on 29 September. They assumed a cash rate of 4.4% at the end of 2026 and 4.5% through 2027, below the current setting.

With that caveat in place, here is what the numbers suggest about 2027.

More competition for each vacancy

The headline labour market forecast is the unemployment rate. In the August SMP, the RBA projected a quarterly unemployment rate of 4.6% in June 2027 and 4.7% in December 2027, up from 4.4% in June 2026 and 4.5% in December 2026. It then reaches 4.8% in 2028.

The actual rate has already moved. Unemployment rose to 4.6% in August 2026, the minutes of the 28–29 September meeting noted, alongside higher participation. The minutes also cautioned that "considerable caution is warranted when interpreting the current official labour force data," so a single monthly reading should be treated carefully.

A rising unemployment rate means a larger share of the labour force is looking for work without having a job. In practical terms, that generally points to more people competing for available positions than when the rate was lower. Governor Michele Bullock noted that unemployment had risen from 3.5% over the past couple of years.

Even so, Bullock described the starting point as relatively strong: "the unemployment rate is still quite low historically, and we still think the labour market is a little bit tight."

Jobs are still being created

A higher unemployment rate is not the same thing as a shrinking job market. The RBA's forecasts have employment continuing to grow throughout the period: 1.2% over the year to June 2027 and 1.1% over the year to December 2027, after 1.4% in December 2026.

Bullock made the point at her 29 September media conference that over a million jobs were created over the past couple of years, even as unemployment rose. As she put it, "a rise in the unemployment rate does not necessarily mean job losses."

The forecasts help show how both trends can coexist. Population growth is projected at 1.3% in June 2027 and 1.2% in December 2027 — close to the pace of employment growth. When the number of people available for work grows at a similar rate to the number of jobs, small differences between the two, together with changes in participation, can nudge the unemployment rate up even while employment expands.

Headcount is only part of the story. For job seekers, the number of hours on offer can matter as much as whether a job is available at all. The RBA tracks this through hours-based underutilisation, a measure of spare labour capacity that captures people who want to work more hours as well as those without work.

The August forecasts have this measure at 5.9% in June 2027 and 6.0% in December 2027, up from 5.6% in June 2026 and 5.8% in December 2026, and rising further to 6.2% by the end of 2028. Read alongside the unemployment forecasts, that suggests the RBA expected spare capacity in the labour market to build gradually through 2027 rather than all at once. A person seeking extra shifts or a move from part-time to full-time work would be counted in this measure, even if they already hold a job.

What pay might look like

The forecasts also say something about wages for those who find work. Growth in the Wage Price Index is projected at 3.3% over the year to June 2027 and 3.1% to December 2027. Average earnings per hour in the non-farm sector are forecast to grow by 3.7% and 3.6% in those periods.

Against that, the RBA projected headline CPI inflation of 2.8% in June 2027 and 2.6% in December 2027. On those forecasts, pay growth would exceed headline inflation during 2027 — a contrast with the present, about which Bullock remarked: "They're seeing real wage cuts." That comparison of forecasts is not an RBA statement, and the outlook could change once the September rate rise and subsequent data are factored in.

Signals closer to the present

The near-term indicators the RBA cited were mixed but not alarming. The minutes recorded that leading indicators pointed to broadly stable labour market conditions in the near term, and that some job advertisement measures were strengthening a little. The post-meeting statement said "Labour market conditions have eased broadly as expected in recent months".

On the broader economy, Bullock was asked about the risk of recession and replied: "That is not our central base case at this moment." The Board did weigh downside risks to activity when considering whether to hold rates in September, but judged those risks to be modest.

The RBA has also been clear that its forecasts are not fixed. Bullock declined to signal future moves — "I'm not going to give you forward guidance" — and said the full effect of interest rate changes takes 12 to 18 months to come through.

The bottom line

The RBA's August forecasts, finalised before September's rate rise, paint 2027 as a year in which employment keeps growing at a little over 1% while unemployment drifts up to 4.6–4.7% and underemployment rises. That suggests a somewhat more competitive market for job seekers than in recent years, though not a collapse in hiring. The forecasts are national averages and will be updated; the next cash rate decision is scheduled for 3 November, following the September CPI release scheduled for 28 October.