Deloitte Access Economics Employment Forecasts

27 February 2026: The Australian labour market has rebounded from a brief flat patch, entering 2026 on steadier footing as market sector hiring begins to overtake earlier public sector-led jobs growth. However, higher interest rates, economic uncertainty, and a widening divide across occupations suggest growth could remain uneven throughout 2026.

Releasing the February 2026 edition of the Employment Forecasts report, Deloitte Access Economics Partner and lead author David Rumbens said: “After nearly a year of weak hiring, employment has stabilised, with 86,400 Australians finding work across December and January.

“This has helped steady the labour market, but the pace of growth remains modest, with annual employment growth of just 1.0% in the year to January 2026, well below the 2.4% average recorded in the three years prior.”

“The unemployment rate has settled around 4.1%, still well below the pre-pandemic average of 5.2%. But the drivers of employment growth are changing. The post-COVID hiring surge in health care, education and public administration has eased as tighter government budgets curtail public sector hiring.”

Market sector recovery

Recent indicators point to some improvement in private sector hiring. In the year to September 2025, market sector employment accounted for nearly two-thirds of job gains.

David Rumbens said: “The shift towards market sector hiring is encouraging, but the outlook remains uncertain. With interest rates back on the rise, elevated borrowing costs and subdued demand will weigh on hiring decisions.”

Deloitte Access Economics forecasts employment growth will ease from 1.8% (259,400 workers) in calendar year 2025 to 1.1% (164,100 workers) in 2026, before lifting slightly to 1.4% (204,000 workers) in 2027 as net overseas migration slows.

A widening divide across occupations

Looking ahead, Deloitte Access Economics’ employment forecasts suggest there is a clear divergence in employment  growth across broad occupation groupings.

• Employment growth is expected to be strongest among Community and personal service workers, Professionals and Labourers.
• Employment among Managers, Clerical and administrative workers, and Sales workers is expected to remain broadly flat.

David Rumbens continued: “The pattern reflects deeper structural changes in the labour market. Roles involving routine tasks are weakening, while demand for trades, physical roles and human-centred services continues to expand. Professional occupations sit in the middle, where AI is likely augmenting rather than replacing work for now.”

CBD hiring set to rebound

Employment growth across Australia’s CBDs is expected to pick up over the year ahead, with traditional white-collar roles poised to recover after a weak 2024-25 period.

Brisbane Near City is expected to record the strongest employment growth across CBD markets in 2025-26, supported by hiring in health care and education. In contrast, employment in Canberra Central is forecast to contract as public sector spending consolidates.

Tracking the impact of AI on the workforce

Understanding the impact of AI on employment remains a key challenge for policymakers and businesses.

David Rumbens said: “Early US evidence suggests junior employment levels have declined in firms that are bigger adopters of AI. Australia is likely one to two years behind this frontier, but the scale of investment in AI suggests labour market impacts – both disruptive and augmentative - may soon emerge.

“At present, most firms are focused on improving AI fluency rather than redesigning jobs around AI. Once organisations restructure workflows to integrate AI more fully, the effects on employment will become clearer.”

About Employment Forecasts
Employment Forecasts is released quarterly and provides forecasts and commentary for each industry and occupation, plus white collar, blue collar and human services employment. There are three levels of data available: state, city and CBD. Employment Forecasts is particularly useful in the analysis of property market demand.