Unemployment rises to its highest level in two years
Just 500 people started a new job in January this year
2 min
The unemployment rate has risen to its highest level in two years at 4.1 percent, according to new data from the Australian Bureau of Statistics (ABS). The seasonally adjusted jobless rate increased by 0.1 percent in January, with the number of unemployed Australians increasing by 22,300 and the number of people with a new job increasing by just 500.
Bjorn Jarvis, ABS head of labour statistics, said this was the first time since January 2022 that the unemployment rate is above 4 percent. Mr Jarvis pointed out that a higher-than-usual number of unemployed people were due to start a job or return to work within the next four weeks. There was a similar trend in January last year. “This may be an indication of a changing seasonal dynamic within the labour market, around when people start working after the summer holiday period,” Mr Jarvis said.
Seasonally adjusted hours worked over the month fell by 2.5 percent. This partly reflects January being a popular time of year for workers to take annual leave. But Mr Jarvis said the drop in hours also reflected the continuation of a trend that began in mid-2023 and has accelerated since October 2023. The annual growth rate in hours worked has slowed significantly to just 0.7 percent in January.
The proportion of Australians aged above 15 years participating in the workforce remained steady at 66.8 percent and the employment-to-population ratio fell 0.1 percent to 64.1 percent. Both measures remain at near historical highs and well above pre-COVID levels. The data shows 6.6 percent of employed people would have liked to work more hours than they did. This is referred to as the rate of ‘underemployment’, and in seasonally adjusted terms it has risen 0.8 percent since the most recent low in February 2023.
CBA Head of Australian Economics, Gareth Aird, said the rate of increase in unemployment was somewhat alarming. “The jobless rate has risen quite sharply over the last five months,” Mr Aird said. “For context it was 3.6 percent in September 2023. A lift of 0.5ppts in just five months is significant and somewhat concerning. Both the unemployment and underemployment rates are at their highest levels since January 2022.”
Mr Aird highlighted that just 500 people had a new job in January, reflecting significant weakness in employment growth. Consensus market analyst expectations had been 25,000 and CBA was more bullish at 40,000. In January 2022, employment rose by 65,000 and in January 2023 it lifted by 25,000. CBA has previously predicted that weak per capita employment growth will result in the labour market deteriorating more materially than the Reserve Bank (RBA) currently forecasts.
The RBA expects unemployment to reach 4.3 percent by the year’s end, and Mr Aird said this looks too low. “We see the unemployment rate rising to 4.5 percent by end-2024. We believe RBA rate cuts will be required this year to prevent the unemployment rate from rising much above 4.5 percent.”
CBA is tipping that the RBA will commence interest rate cuts in September. It predicts a total reduction of 75 basis points in 2024 and another 75 basis points in the first half of 2025.
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Australian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market. The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index. …
Continue reading “ASX falls 0.7 per cent as miners and property stocks retreat”
2 minAustralian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market.
The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index.
Energy was the notable exception, gaining more than one per cent as Brent crude traded above US$103 a barrel. Oil had moved higher amid uncertainty surrounding potential US diesel-export restrictions and broader geopolitical supply risks. The move supported energy producers but renewed concern about inflation inputs across transport and the wider economy.
Gold shares were weak even as spot bullion remained historically elevated. The All Ordinaries Gold index fell about 2.25 per cent, showing that equity performance can diverge from the commodity because of valuation, currency, operating and company-specific factors.
Zip was a prominent loser, falling 11.38 per cent after the company reported short sales after the previous close. Nine Entertainment also weakened after UBS analysts warned of near-term revenue challenges associated with its advertising-supported subscription tier.
Premier Investments led larger winners despite caution about the retail environment. Breville, in which Premier owns a significant stake, also appeared among leading movers. In the broader ASX 300 screen, Myer gained 11.43 per cent and MAAS Group rose 7.93 per cent, while Lotus Resources fell 10.53 per cent. These percentage moves should be checked against company announcements and trading liquidity before attributing causes.
The Australian dollar was broadly flat at US70.38 cents. Spot gold was around US$4,280 an ounce, Brent crude approximately US$103.08 a barrel and iron ore near US$96.90 a tonne late in the session.
The rate outlook remains the central domestic catalyst. Labour-market weakness has not eliminated the possibility of an RBA increase next week, leaving banks, listed property and other rate-sensitive sectors exposed to changing expectations.
Market dashboard
S&P/ASX 200: 8,702, down 0.72 per cent.
All Ordinaries: 8,897, down 0.66 per cent.
Best sector: Energy, up more than one per cent.
Weakest areas: Real estate and materials were the major drags; confirm final sector percentages before publication.
Material winner: Premier Investments led the large-company gainers. Confirm its final closing move from the ASX before publication.
Material loser: Zip, down 11.38 per cent.
ASX 300 percentage leader: Myer, up 11.43 per cent.
ASX 300 percentage laggard: Zip, down 11.38 per cent.
AUD/USD: Approximately US$0.7038, broadly flat.
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