Australia’s unemployment rate climbed in January to 4.1% from 4%, as the workforce expanded more than the number of jobs added.
Net employment rose 44,300 in January, following a 60,000 increase in December, according to data released by the Australian Bureau of Statistics on Thursday.
“With employment rising by 44,000 people and the number of unemployed increasing by 23,000 people, the unemployment rate rose to 4.1%,” explained Bjorn Jarvis, ABS head of labour statistics.
The increase in jobs was driven by a rise in full-time employment, which climbed by 54,100 and was offset by a loss in part-time work.
Annual jobs growth increased 3.5%, more than twice the pace seen in markets such as the US.
With the Reserve Bank of Australia having announced its first rate cut in four years earlier this week, reducing its cash rate by 25 basis points to 4.1%, the latest higher-than-expected employment growth data will be closely monitored by the RBA as it decides on any further cuts over the rest of the year.
Speaking after reducing the cash rate on Tuesday, RBA governor Michele Bullock said the possibility that the central bank was over-estimating the level of full employment as “good news” but emphasised that it remained uncertain about the measure.
“We are continuing to test how low we can keep unemployment without adding to inflationary pressures, and so far, in good news, we’re achieving it,” said Bullock. “But we’ve got to be careful.”
Capital Economics senior APAC economist Abhijit Surya said the creation of 44,000 jobs in January – over 20,000 more than expected – put employment growth on the path to overshoot the Reserve Bank’s forecast of 2.8% growth over the first quarter.
“Today’s data release will likely reinforce the RBA’s view that it needs to be cautious about any further policy normalisation. We expect the bank to cut rates only twice more over its easing cycle this year,” he said.
On Wednesday, the ABS released figures which showed that wages rose by 0.7% in the December quarter, pulling annual growth down to 3.2% from its 2023 peak of 4.2%.
The Australian dollar rallied immediately after the ABS released its data on Thursday. The Aussie dollar rose 17% to US63.51¢ from US63.36¢ shortly after the announcement.
