Australia’s jobless rate jumped to a two-year high in January as employers barely added any jobs and more people started to look for work.
The economy added 11,100 full-time jobs and shed 10,600 part-time roles, leaving a net gain for the month of just 500 jobs.
The jobless rate last month was 4.1%, the Australian Bureau of Statistics said on Thursday. That result compared with economists expecting the rate to tick up to 4% from December’s reported 3.9% with a net increase of 25,000 jobs.
“This was the first time in two years, since January 2022, that the unemployment rate had been above 4%,” said Bjorn Jarvis, ABS head of labour statistics.
Part of the increase in the jobless rate was because more people started to look for work at the start of the year although the participation rate remained unchanged from December at 66.8%.
“Our labour market has been weakening but it has been weakening from a quite incredibly strong and resilient base,” the treasurer, Jim Chalmers, told a media conference in Canberra. “[W]e enter this period of economic uncertainty from a position of genuine strength and the labour market is a big part of that story.”
Labour market figures have been volatile in recent months, with November jobs jumping 61,500 only for 65,200 to be lost in December, according to preliminary numbers. Economists estimate the economy needs to add about 30,000 jobs a month to keep the unemployment rate steady as the population swells.
The Reserve Bank will be watching today’s employment figures as its assesses the impact of 13 increases of official interest rates since May 2022 that have lifted the cash rate to a 12-year high.
RBA governor Michele Bullock told senate estimates earlier on Thursday:“We think we’re in a good position to get inflation down in a reasonable amount of time while still keeping employment growing,” she said.
Hours worked in January fell by 49m, continuing a trend downwards since the middle of 2023.
“Since October 2023, the annual growth rate in hours worked has slowed considerably, down to 0.7% in January 2024, and well below the annual employment growth of 2.6%,” Jarvis said.
The jobs story looks like more people working but hours worked falling. pic.twitter.com/xcZvfqAtL5
— @phannam@mastodon.green (@p_hannam) February 15, 2024
Investors viewed the labour market figures as further reducing the chances of another RBA interest rate rise.
The Australian dollar was down about 0.1 US cents to 64.9 US cents and the ASX 200 share index extended gains for the day by about 0.1 percentage points to 0.9%. Lower interest rates make it less attractive to hold the Aussie dollar while also making it cheaper for firms to borrow.
Prior to today’s jobs figures, investors had fully priced in an RBA cut of 25 basis points in the cash rate to 4.1% by November, according to the ASX rates tracker.
“The swift weakening in labour market conditions raises some doubts as to whether we will see an orderly easing in conditions in 2024,” Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia, said. “[P]olicy makers will be a little more concerned about the outlook after today’s data.”
Sarah Tan, an economist with Moody’s Analytics, said “cracks are emerging in the Aussie labour market” but forward indictors still pointed to “robust employment demand”.
“December survey data from the Australian Department of Jobs and Skills showed 20% of respondents were looking to bring on more staff over the next three months,” Tan said. “Some 5% were looking to trim their workforces, compared with 3% in November.”
Job vacancies also remained more than 70% above pre-pandemic levels with employers seeking about 400,000 workers. Population growth, though, was likely to exceed job generation, pushing the jobless rate to 4.5% by December, she said.
New South Wales, the state that accounts for about a third of the economy, has dropped back to the pack with seasonally adjusted unemployment rate matching the national average at 4.1%.
The state boasted a 3.4% jobless rate six months ago, compared with 3.7% for Australia overall.
Victoria and the Northern Territory recorded the lowest unemployment rate at 3.9%, down from December’s rate of 4% and 4.5%, respectively.
Tasmania, where voters go to the polls for a state election on 23 March, saw its jobless rate jump from 3.6% in December to 4.5% last month.
Queensland, which is also going to the polls later this year, has seen its unemployment rate edge lower, from 4.5% in July to 4.2% last month.
