Australia jobs barely grow in Jan, unemployment hits 2-year high

Investing.com-- Australia’s employment space grew much lesser than expected in January, while unemployment rose to a two-year high as the year-end holidays saw a fewer number of people in the workforce.

The total number of employed people grew by about 500 in January, data from the Australian Bureau of Statistics (ABS) showed on Thursday. The reading was substantially lower than estimates for growth of 26,400 and showed little improvement from a decline of 65,100 people in the prior month. 

This saw the participation rate- ie the percentage of the working-age population that is in the workforce- remain steady at 66.8%, compared to estimates for a reading of 66.9%. 

The unemployment rate however, grew more than expected to a two-year high of 4.1% from 3.9% in the prior month.

“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,” Bjorn Jarvis, ABS head of labour statistics, said in a note.

“January is a popular month for people to take annual leave,” Jarvis added, noting that all the January job reports over the past three years had shown an increased number of unemployed people poised to start working after the new year holiday, as compared to pre-pandemic trends. 

Thursday’s reading still showed some cooling in the labor market. While the rise in unemployment was largely due to seasonal trends, monthly hours worked continued to decline at a steady pace- a trend that has persisted since mid-2023.

The ABS had earlier noted that slower hours worked were the clearest sign of a cooling labor market, although the broader space was still running well above pre-pandemic levels.

A cooling labor market, along with sticky inflation, are the two main factors affecting the Reserve Bank of Australia’s considerations in altering interest rates. The central bank had recently warned that it could still raise interest rates further if inflation remained sticky, and that while the labor market had cooled in recent months, it had not cooled as much as the RBA was hoping. 

The Australian dollar showed little reaction to the labor data, while the ASX 200 stock benchmark rose 0.9%.