Australia’s job market is undergoing a consequential transition as FY2026 begins, with economic indicators pointing toward normalisation after years of volatility, according to Launch Group’s latest CEO Market Report. Yet, while the fundamentals are improving, businesses face ongoing challenges, including high candidate mobility and cost-of-living pressures that continue to influence hiring strategies and workforce planning decisions.  

For the new financial year, the Australian economy shows a mixed but increasingly positive outlook. Inflation has eased dramatically to 2.4% from its peak of 7.8% in December 2022. The Reserve Bank has then responded with three interest rate cuts this year, bringing rates down to 3.6% as monetary policy shifts to support growth.  

“Australia’s economy is finding its balance after a turbulent few years,” notes Damien Ross , CEO of Launch Group. “Household spending, which had been flat for some time, is starting to pick up again, giving the labour market a steadier footing as we head into the second half of 2025.”  

Unemployment has settled at 4.1%, representing a return to pre-COVID levels and aligning closely with the 4% target that policymakers consider optimal for maintaining price stability. With population growth forecast to average 1.4% over the next five years—the third-fastest rate in the Asia-Pacific region—underlying employment demand remains robust.  

The consumer recovery appears particularly encouraging, with household consumption returning to growth across both essential and discretionary categories. Discretionary spending has rebounded strongly, showing a 13% increase since pre-COVID levels, reflecting improved consumer confidence and easing cost pressures.  

Despite improving economic fundamentals, business hiring intentions reveal a more measured approach to workforce expansion. Just over one in five Australian businesses (21%) plan to grow headcount in the coming months, with Information Technology leading predicted demand for Q1 FY2026.  

This cautious optimism is reflected in job advertisement patterns, with SEEK job ads returning to their long-term index level of 100 after the post-COVID boom, signalling what industry analysts describe as stable and sustainable recruitment activity, rather than the frenzied hiring of recent years.  

“Unlike recent downturns of the GFC (2008) and Covid (2020), we are not expecting to see a significant spike in higher demand that would place the supply and demand of the labour market in a position of imbalance,” Ross explains. “This should mean that wage and contract rates will increase relative to and in line with CPI inflation.”  

Candidate behaviour reveals high levels of market activity, with 77% of professionals either actively job hunting or open to new opportunities. Notably, the highest-paid professionals are showing the greatest mobility, leveraging their market position as competition for talent intensifies.  

For those actively seeking new roles, salary has been flagged as the primary motivator, with four in ten candidates reporting discomfort with their current compensation levels. This reflects ongoing cost-of-living pressures that, despite easing inflation, continue to impact household budgets across Australia.  

“Candidates are valuing more certainty as the cost of living remains at the top of the agenda for many Australians,” Ross observes, highlighting how financial security has become a dominant factor in career decision-making.  

While economic indicators improve, business confidence remains fragmented. Nearly half of surveyed businesses (49%) report difficulty controlling outcomes in the current market environment, with more than a third expressing concerns about their future prospects.  

This uncertainty is leading to adjustments in workforce strategy, with one in five businesses having reduced their temporary or contract staff over the past year. The trend suggests companies are prioritising core permanent roles while maintaining flexibility through reduced reliance on contingent workers.  

The caution reflects ongoing global uncertainties, including geopolitical instability in the Middle East and potential trade disruptions from US policy changes. While these factors may create short-term volatility in sectors such as energy, resources, and manufacturing, the domestic economic outlook remains relatively resilient.  

This shift in market conditions has created distinct challenges and opportunities for different stakeholders. For employers, the key lies in striking a balance between efficiency and competitiveness in recruitment processes.  

“As competition grows for talent over the coming year, we recommend employers run thorough but efficient hiring processes,” Ross advises. “Those employers who drag their heels with next stage feedback or offer documentation approval will lose out on top talent.”  

The retention challenge requires equal attention, with Ross emphasising the importance of “regular feedback and formal annual reviews, along with aligning remuneration, reward and recognition with inflation levels and business outcomes.”  

For contract and temporary roles, the strategy shifts toward longer-term thinking. “For contract hires, sensible rates with longer-term engagements will win the day,” reflecting candidates’ desire for financial certainty in an environment where cost-of-living concerns remain paramount.  

Looking ahead, Ross anticipates broader economic improvements that could stimulate employment growth. “With further interest rate reductions expected over FY2026, we should see consumer spending increase, and as a result, see continuous stimulation of the Australian economy.”  

This optimism extends to capital investment, with expectations of increased project spending across corporate Australia. “We anticipate an improvement in capital spend in projects across corporate Australia, many of whom have held back on such initiatives in recent years,” Ross explains.  

The projection aligns with population growth forecasts that suggest sustained employment demand over the medium term, providing a foundation for steady job market expansion without the dramatic fluctuations that have characterised recent years.  

Rather than achieving full stability, Australia’s job market appears to be successfully navigating a transition from post-pandemic volatility toward more predictable patterns. The challenge for businesses and candidates alike lies in adapting strategies developed during crisis conditions to this developing environment.  

“The market is healthy, but it requires a different approach than we’ve needed in recent years,” Ross concludes. “This represents both an opportunity and a responsibility for how we help both sides of the equation navigate this transition successfully.”  

As FY2026 progresses, the interplay between improving economic fundamentals and persistent business caution will likely define the pace and character of employment growth. For now, the signs point toward a market that, while not without challenges, offers genuine reasons for measured optimism.  

For insights on Australia’s changing job market or to discuss organisational hiring strategies, contact Damien Ross at damien.ross@launchgrp.com.au