"Today's data showing unemployment remains steady at 4.1% is one of the bright spots in Australia's economic performance," said Innes Willox, Chief Executive of the national employer association, the Australian Industry Group.
"With core inflation still too high, business investment slowing, and real GDP growth at an anaemic 1.0% in the last quarter, the labour market is showing surprising resilience.
"The issue is that this resilience is being driven by government stimulus, which is distorting Australia's labour market.
"In the past year, labour utilisation in the market sector has been flat. But in the non-market sector – comprising the public administration, education, health and social industries – it grew by 4.9%.
"Employment growth in these industries reflects increased spending by state and federal governments.
"Government spending obscures emerging weakness across the rest of the labour market.
"Most market sector industries reduced their labour demand in the year to the June quarter of 2024. Net job creation in the private sector stalled to 0.5% in the quarter, compensated by a surge to 2.3% in the public sector.
"This shows that Australia's labour market resilience has become increasingly reliant on government-spending. As state and federal budgets are under increasing fiscal pressure, the medium-term sustainability of this spending path is uncertain.
"With more global economic turbulence expected in the new year, it is imperative to create conditions for improved investment and growth across the private sector to secure recent strong employment outcomes," Mr Willox said.
Read the research from Ai Group Research & Economics here
