Unemployment edges up to four per cent, as expected
South Australia’s unemployment rate rose in December, but the underemployment rate dropped significantly to six per cent.
Australia’s unemployment rate has a four in front of it once again, adding to the case for a Reserve Bank of Australia rate cut after a surprise tightening in the labour market.
The unemployment rate ticked up from 3.9 per cent to four per cent, as expected by analysts.
In South Australia, the seasonally adjusted unemployment rate was above the national average at 4.2 per cent – up 0.3 percentage points – equal to that of the Northern Territory.
Underemployment in SA fell by 1.3 points in December to just 6 per cent seasonally adjusted – well below Tasmania’s 7.7 per cent which is the highest nationally.
About 56,000 jobs were added to the economy in December, the Australian Bureau of Statistics (ABS) reported, above market expectations of 20,000 new jobs.
You might like
“With employment rising by 56,000 people and the number of unemployed increasing by 10,000 people, the unemployment rate rose to 4.0 per cent,” ABS head of labour statistics Bjorn Jarvis said.
The rise in unemployment comes after a surprise drop from 4.1 per cent in November. The seasonally adjusted rate had been steadily rising from its nadir of 3.4 per cent in October 2022.
The participation rate rose to a fresh record high of 67.1 per cent.
“The rise in both the number of people employed and unemployed also saw a further rise in the participation rate, that is the percentage of the population who are employed or unemployed,” Jarvis said.
Stay informed, daily
Ongoing strength in the labour market has been cited by RBA governor Michele Bullock as a reason behind the RBA holding the cash rate at 4.35 per cent.
The unemployment rate has held well below the central bank’s 4.3 per cent forecast for the fourth quarter.
But economists at ANZ and Commonwealth Bank still expect the RBA to cut interest rates by 25 basis points at its next meeting in February due mainly to an unexpected slowdown in inflation.
While a strengthening labour market has made the Reserve Bank reluctant to cut rates, CBA chief economist Stephen Halmarick said low unemployment was not as critical a factor as it was made out to be.
He believes the non-accelerating inflation rate of unemployment (NAIRU) – the lowest joblessness rate that can be sustained without causing inflation to rise – is lower than the RBA estimates.
“And the supporting argument for that is, well, the unemployment rate has been around 4 per cent for the last year or so, and the rate of inflation is decelerating and the rate of wages growth is decelerating,” he told AAP.
“So that that tells you 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.
– with AAP
