Unemployment rises to its highest level in two years

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.

Alibaba Group co-founder Jack Ma said competition will make the company stronger and the e-commerce giant needs to trust in the power of market forces and innovation, according to an internal memo to commemorate the company’s 25th anniversary.

“Many of Alibaba’s business face challenges and the possibility of being surpassed, but that’s to be expected as no single company can stay at the top forever in any industry,” Ma said in a letter sent to employees late Tuesday, seen by The Wall Street Journal.

Once a darling of Wall Street and the dominant player in China’s e-commerce industry, the tech giant’s growth has slowed amid a weakening Chinese economy and subdued consumer sentiment. Intensifying competition from homegrown upstarts such as PDD Holdings ’ Pinduoduo e-commerce platform and ByteDance’s short-video app Douyin has also pressured Alibaba’s growth momentum.

“Only with competition can we become stronger and allow the industry to remain healthy,” Ma said.

The letter came after Alibaba recently completed a three-year regulatory process in China.

Chinese regulators said in late August that they have completed their monitoring and evaluation of Alibaba after the company was penalized over monopolistic practices in 2021. Over the past three years, the company has been required to submit self-evaluation compliance reports to market regulators.

Ma reiterated Alibaba’s ambition of being a company that can last 102 years. He urged Alibaba’s employees to not flounder in the midst of challenges and competition.

“The reason we’re Alibaba is because we have idealistic beliefs, we trust the future, believe in the market. We believe that only a company that can create real value for society can keep operating for 102 years,” he said.

Ma himself has kept a low profile since late 2020 when financial affiliate Ant Group called off initial public offerings in Hong Kong and Shanghai that had been on track to raise more than $34 billion.

In a separate internal letter in April, he praised Alibaba’s leadership and its restructuring efforts after the company split the group into six independently run companies.

Alibaba recently completed the conversion of its Hong Kong secondary listing into a primary listing, and on Tuesday was added to a scheme allowing investors in mainland China to trade Hong Kong-listed shares.

Alibaba shares fell 1.2% to 80.60 Hong Kong dollars, or equivalent of US$10.34, by midday Wednesday, after rising 4.2% on Tuesday following the Stock Connect inclusion. The company’s shares are up 6.9% so far this year.

Unemployment rises to its highest level in two years

Just 500 people started a new job in January this year

“Only with competition can we become stronger and allow the industry to remain healthy,” Ma said