New labour data hits as unemployment rises to 4.5 per cent

20 August 2026

Today’s ABS Labour Force data shows the labour market is beginning to feel the impact of recent economic headwinds, while workforce shortages continue to constrain building and construction.

The Labor Force data for July shows:

• Australia’s unemployment rate increased to 4.5 per cent from 4.4 per cent in June
• Over 15,800 jobs were lost across the economy
• Losses were concentrated in the part-time labour market, with 32,160 part-time jobs lost

Master Builders Australia Chief Economist Shane Garrett said the figures reflected both ongoing workforce challenges and a broader slowdown in economic activity.

“The labour market typically responds to changes in economic activity with a bit of a delay, and these figures are consistent with the economic pressures that have emerged over recent months.

“The construction market is being hit from all sides, which is making it even harder to address the industry’s significant workforce shortages. We remain short hundreds of thousands of workers, while apprenticeship numbers are at a five-year low,” Mr Garrett said.

“This is being influenced by a combination of factors, including three interest rate increases, the conflict in the Middle East and the repercussions of the Federal Budget. The loss of part-time jobs is particularly notable because these roles are often among the first to be reduced when businesses become more cautious about costs and future demand.

Master Builders Australia CEO Denita Wawn said the Federal Government must ensure Australia has the workforce capacity to meet the National Housing Accord target of 1.2 million new homes by mid-2029, while also delivering Olympics-related projects and critical infrastructure over the coming years.

“Demand for construction work continues to grow, but that demand cannot be realised unless governments create the policy and economic conditions needed to support investment and building activity. Builders and tradies need certainty that when they take on a contract, they can employ staff and apprentices knowing that their projects are going to remain commercially viable.

“That means improving investment conditions as well as addressing workforce shortages by reversing the Budget’s cuts to employer apprenticeship incentives, expanding Fee-Free TAFE funding to include not-for-profit registered training organisations that achieve strong completion rates, and strengthening school-to-trade pathways.

“The entire skilled migration system also needs to be fixed because, at the moment, it is expensive, slow and ineffective, and does not deliver what the community expects. it is imperative construction workers are a priority within the skilled migration system, especially in a housing supply crisis.”

Media contact: Dylan Hafey, Adviser, Media & Government Relations

0497 330 064 | dylan.hafey@masterbuilders.com.au