Is the jobs market starting to cool? Not in the ACT (yet)

The number of payroll jobs nationally declined by 0.2 per cent last month in the first sign of weakness since early this year.

But in Canberra, payrolls are still growing. According to the Australian Bureau of Statistics they were up 0.5 per cent in the four weeks to mid-July to be 4.8 per cent higher than a year earlier. Among the other states and territories, only Queensland recorded an increase in July, up by just 0.1 per cent.

ABS head of labour statistics Bjorn Jarvis said that although there was some "variability" in payroll data towards the end of the financial year, the figures showed that the annual rate of payroll jobs growth had slowed. They increased by 3.7 per cent to mid-July this year, compared with 4.5 per cent at the same point last year.

"This suggests that the labour market may be starting to slow, compared to the relatively stronger growth we saw during 2022," Mr Jarvis said.

The result reinforces other reports that conditions in the labour market, though still very tight, are showing signs of easing.

The Reserve Bank of Australia said its business liaison program revealed that "hiring new labour has become a little easier for most firms in recent months, and staff turnover rates have generally declined", with much of this attributed to the recent influx of migrants.

Similarly, a NAB survey of businesses has found the employment growth has softened in recent months and job ad volumes measured by SEEK are falling.

The Reserve Bank expects employment growth to slow to 2.3 per cent by the end of the year and decelerate during 2024 to just 1 per cent, forcing the jobless rate - currently at 3.5 per cent - up to 4.4 per cent by late next year.

Outgoing RBA governor Philip Lowe is likely to be questioned on the outlook for employment and the economy when he appears before the House of Representatives Economics Committee for the final time as central bank boss on Friday.

After a torrid period at the helm, particularly during the pandemic and the current fight to tame inflation, Dr Lowe's term will end next month when leadership will pass to his deputy Michele Bullock.

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Ms Bullock, who will also appear at the hearing on Friday, could face a grilling on her understanding of labour market developments in an attempt to determine if the central bank will alter course on interest rates under her leadership.

In a speech in June, Ms Bullock talked of the need for the unemployment rate to rise to about 4.5 per cent in order to bring supply and demand in the labour market into balance.

After raising rates 12 times in 14 months, the central bank has held monetary policy steady for the past two months, encouraging speculation that the tightening cycle has ended and rates are set for an extended pause.

Markets think there is still a 50 per cent chance of one more rate rise later this year but have begin pricing in the possibility of rates coming down in the second half of 2024.