Australia’s January Unemployment Change

By itself, this could be an indication of labour tightness. On the other hand, last month’s underemployment rate came in at 8.4%, which is above the historical average. This indicates that there still might be room in the labor market.

While December’s unemployment rate dropped to multi-year lows, employment beat expectations in its increase, even though the participation rate fell. This reiterates the position seen last month, that job creation remains robust. Hiccups in the data are more likely a representative of changes in demand for jobs, than in the economy’s ability to create jobs.

Expectations

Current expectations are for the unemployment rate to stay at its multi-year low of 5.0%. For reference, the RBA’s monetary statement projected the unemployment rate to drop to 4.75% by the end of the year.

The participation rate is expected to tick back up to 65.7%, which would be one decimal higher than the prior month. Labor force participation has remained pretty steady over the last year, between 65.5% and 65.8%, not giving us many surprises.

As for the employment change, after two consecutive months of beating expectations, predictions are for there to have been 27.8K jobs created during January, which would be an increase over the prior month.

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