Even at full employment, some level of unemployment is to be expected as workers leave jobs and search for new ones. As my colleague Luci Ellis discussed last week, we don't directly observe the unemployment rate associated with full employment – we need to estimate it. [1] Over recent times there has been a gradual accumulation of evidence which has led to lower estimates.
While it is not possible to pin the number down exactly, the evidence is consistent with an estimate below 5 per cent, perhaps around 4½ per cent. Given that the current unemployment rate is 5.2 per cent, this suggests that there is still spare capacity in our labour market.