Businesses hiring needs are on the rise, but the labour market remains too tight for the Reserve Bank, an economist warns.
Fresh figures released by the Australian Bureau of Statistics shows there were 337,9000 job vacancies as of February 2026, the highest level since November 2024.
The jobs shortfall was widespread with 12 of the 18 sectors looking for more staff over the previous three months.
The construction sector led the way up 19.3 per cent compared to last year, while the retail trade, accommodation and food services industries also showed a jump in the need for workers.
Despite employers saying they needed more staff, there were only two unemployed people per job vacancy, slightly down from 1.9 people a year ago.
Prior to the pandemic there were three jobs for every unemployed person.
APAC economist Callam Pickering said this tight labour market would likely lead to further interest rate pain.
“The latest labour market data clearly shows that the job market remains tight,” he said.
“We still expect the RBA to hike rates again in May to push that process along.”
Australia’s central bank runs a dual mandate, having to keep inflation stable between 2 to 3 per cent while trying to maintain full employment.
In March, the RBA lifted the cash rate by a further 25 basis points from 3.85 to 4.1 per cent, back to where it was in April 2025.
The central bank has now increased interest rates in back-to-back meetings by 50 basis points.
While stubbornly high domestic inflation was the main driving force behind the RBA lifting the cash rate, they did mention the nation’s labour market remains tight.
“Labour market conditions were assessed to have tightened a little further relative to the level consistent with full employment, notwithstanding an easing in growth in unit labour costs,” the RBA board said in its minutes from the March meeting.
“Forward-looking indicators suggested that the labour market was likely to remain resilient in the near term.”
Despite the grim warning, Mr Pickering said February felt like a lifetime ago with the economic and geopolitical situation completely changing due to the start of the US/Israel and Iran conflict at the end of that month.
“The economic outlook has soured in recent weeks, but inflationary pressures have picked up,” he said.
“The RBA was already hiking before the conflict in the Middle East began due to what was at the time primarily a domestically-driven surge in inflation.
“The current situation is more complicated. Monetary policy isn’t the best way to address a supply-side shock and hiking rates won’t have any meaningful impact on fuel prices, outside of impacting the exchange rate.”
