Unemployment in Australia showed no sign of falling, with a 0.1 percent rise to 4.0 percent in December of last year, according to the Australian Bureau of Statistics (ABS).
This follows a steady increase from its low point of 3.4 percent in October 2022.
While the number of people with jobs rose by 0.4 percent, so did the hours they are working—up by 0.5 percent in December, higher than the average monthly increase of 0.3 percent that year.
In total, 56,000 more people found employment, which was well above market expectations of 20,000 new jobs, but the number of unemployed also increased by 10,000.
In one positive sign, the 0.4 percent gain in jobs was above the average monthly population growth of 0.2 percent over the year, meaning vacancies are outpacing growth in the working-age population.
However, the trend toward increased hours continued its inexorable rise, up to 112.1 from an indexed rate of 100 in March 2020.
Another positive in December was a 0.1 percentage point fall in the underemployment rate to 6.0 percent.
This measure, which reflects people working in low-skill or part-time jobs due to a lack of full-time opportunities, shows some improvement.
However, the underutilisation rate, which combines the unemployment and underemployment rates, remained at 10.0 percent.
Besides the pandemic, which caused significant job losses, the last time it was at that level was just before the Global Financial Crisis in 2008, another period of severe economic problems.
While the Reserve Bank has cited a strengthening labour market as a major reason it is reluctant to cut rates, economists at ANZ and Commonwealth Bank still expect the RBA to cut interest rates by 25 basis points at its next meeting in February
This is mainly due to an unexpected slowdown in inflation.
CBA chief economist Stephen Halmarick suggested that low unemployment is not as critical as previously thought, citing that the inflation rate and wage growth are decelerating.
He believes the non-accelerating inflation rate of unemployment (NAIRU)—the rate of joblessness that can be sustained without causing inflation to rise—is lower than the RBA estimates.
“The NAIRU has got to be close to where the current unemployment rate has been and not as high as four and a half, which is the RBA forecast.”
Bonds traders predicted an almost three-quarter chance of a February rate cut ahead of the ABS release.
