Australia unemployment hits two-year high as jobs growth sputters

AUSTRALIAN employment was surprisingly weak in January, while the jobless rate climbed to a two-year high, a further sign the labour market was loosening in the face of a slowing economy and subdued consumer demand.

The Australian dollar gave up early gains and were last at US$0.6489, bonds rallied and markets moved to price in a greater chance of a rate cut in September, from November before.

Figures from the Australian Bureau of Statistics (ABS) on Thursday (Feb 15) showed net employment rose just 500 in January from December, when it dived 62,800. Market forecasts had been for an increase of around 30,000, though the series has been very volatile in recent months.

The jobless rate rose to 4.1 per cent, topping forecasts of 4.0 per cent and the highest since January 2022. The participation rate held at 66.8 per cent, while hours worked fell a sharp 2.5 per cent from the previous month.

Full-time employment added 11,100 in January, after sliding the month before.

The report added to signs the labour market was slowing, one reason the Reserve Bank of Australia (RBA) left its benchmark interest rate unchanged at 4.35 per cent earlier this month. The RBA expects the jobless rate to hit 4.2 per cent by June this year. The increased supply in the workforce – thanks to a surge in migration which has restrained wage inflation – has helped nudge up the jobless rate, without triggering massive job losses in the economy.

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After the data, swaps brought forward the timing of the first rate cut to September, compared with November previously, and added to the total easing expected this year to 38 basis points (bps) from 28 bps before.

Bjorn Jarvis, ABS head of labour statistics, noted a changing seasonal dynamic within the labour market around when people start working after the summer holiday period in January.

“While there were more unemployed people in January, there were also more unemployed people who were expecting to start a job in the next four weeks,” said Jarvis. REUTERS