Westpac said employment in Australia is still tracking below current working-age population growth despite rebounding by 39,500 in August, more than reversing the 15,900 decline recorded in July, according to a Thursday note by the bank.

The bank said the participation rate climbed to over 67%, with cost-of-living pressures drawing more people into the workforce alongside ongoing structural support from female and older workers.

Labor supply continues to outpace demand, meaning slack is building gradually through rising unemployment rather than outright job losses, Westpac said, adding that some of August's strength could reflect modest residual seasonality that partially unwinds in September. However, this is unlikely to change the broader picture of a gradually cooling labour market, it noted.