The latest labour force figure show that not only did unemployment fall in July to 3.4%, but underemployment also fell from 6.1% to 6.0%. That means the overall underutilisation rate is down to 9.4% – the lowest level since April 1982.

The figure highlights the strength of the labour market, but coming off the back of the wages data yesterday it also highlights the massive disconnect between the labour capacity concerns and wage growth.

Prior to the pandemic, wages and underutilisation had a very linear relationship. But that has undergone a massive shift. The current level of underutilisation should be delivering annual wages growth of at least 4.5%; instead it is nearly 2%pts lower.