The seasonally adjusted unemployment rate rose by 0.1 percentage point to 4.1 per cent in January, according to data released on Thursday by the Australian Bureau of Statistics (ABS).
Employment rose by 44,000 people, following a bump of 56,000 a month prior.
Consensus was for an unemployment rate of 4.1 per cent alongside a 20,000 boost in employment.
Bjorn Jarvis, ABS head of labour statistics, said: “With employment rising by 44,000 people and the number of unemployed increasing by 23,000 people, the unemployment rate rose to 4.1 per cent.”
He highlighted that the rises in both the number of people employed and unemployed saw the participation rate rise by 0.1 percentage point, to a new record high of 67.3 per cent.
“This was 0.8 percentage points higher than a year ago and 1.8 percentage points higher than March 2020,” Jarvis said.
Most of the rise in both employment and unemployment in January reflected rises for women, with female employment rising by 44,000 and unemployment by 24,000, the ABS data showed. In contrast, male employment and unemployment both changed by less than 1,000 people.
Some of the increase in unemployment reflected more people than usual with jobs in January who were waiting to start or return to work.
“As in the past three Januarys, in January 2025 we again saw more people than usual who had a job but were waiting to start or return to work,” Jarvis said.
The employment-to-population ratio rose 0.1 percentage point to a new record of 64.6 per cent – 0.8 percentage points higher than a year ago and 2.4 percentage points higher than before the COVID-19 pandemic.
“With a relatively large increase in female employment in January, their employment-to-population ratio rose 0.3 percentage points, to a record high of 60.8 per cent. This was 0.7 percentage points higher than a year ago and 2.9 percentage points higher than before the COVID-19 pandemic,” Jarvis said.
“The rise in the number of unemployed women in January also saw their unemployment rate rise to 4.1 per cent, in line with the unemployment rate for men.”
Is jobs data neutral for RBA?
Commenting on Thursday’s data print, HSBC’s chief economist, Paul Bloxham, said: “Today’s jobs market figures showed that Australia’s jobs market remained strong, and is still near full employment.
“The strength was evident in the upside surprise to employment, with 44k jobs created in the month. This followed a strong December print too, which saw 60k jobs created,” Bloxham said, highlighting that in previous years, December and January prints have tended to be weaker than expected.
Ultimately, he explained, a continued easing in wages growth offsets concern and, combined with a still-tight jobs market, translates into “good news” for the Reserve Bank.
“We expect that the RBA’s easing phase will be very gradual, given the continued strength of the jobs market,” Bloxham said.
“We see the RBA on hold for a few meetings – our central case has the next rate cut in Q3 2025.”
AMP’s economist, My Bui, similarly acknowledged the surprising resilience of the unemployment rate, noting that more than two years after the trough of 3.4 per cent in late 2022, the unemployment rate has only increased by some 0.7 percentage points and remained around the 4 per cent level throughout the past year.
Noting that the only argument against more rate cuts in this cycle is a labour market that operates “above capacity”, Bui said the continual “tick down” in wages growth makes Thursday’s jobs report “neutral” for the future path of interest rates.
“This week’s 25 bps cut will provide a modest uptick to growth but still below the RBA forecasts and the RBA will likely hold in April before cutting further in May and August,” Bui said.
VanEck’s Russel Chesler had a slightly different interpretation, noting that the “historically low” unemployment rate could trigger wage inflation this year.
“Notwithstanding the RBA’s rate cut on Tuesday, we’re still not out of the woods yet in terms of getting inflation under control,” he said.
“With unemployment refusing to budge, robust retail sales and a government that is continuing to spend in an election year, we’re not seeing any other data that supports further rate cuts any time soon.”
