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The Australian Bureau of Statistics’ (ABS) most recent Labour Force data for January 2024 has found that the unemployment rate has increased to 4.1 per cent (seasonally adjusted), up from 3.9 per cent.
According to ABS head of labour statistics, Bjorn Jarvis, this was the first time in two years, since January 2022, that the unemployment rate had risen above 4 per cent.
However, Mr Jarvis stated that the employment rate has remained stable as the number of unemployed individuals increased by 22,000 in January.
The ABS noted that similar to January 2022 and 2023, the increase in this month’s unemployment rate has coincided with a “higher-than-usual” number of people unemployed but said they would be beginning or returning to work in the future.
“While there were more unemployed people in January, there were also more unemployed people who were expecting to start a job in the next four weeks,” Mr Jarvis said.
“This may be an indication of a changing seasonal dynamic within the labour market, around when people start working after the summer holiday period.
“In January 2022, 2023, and 2024, around 5 per cent of people who were not employed were attached to a job, compared with around 4 per cent in the January surveys prior to the COVID-19 pandemic.”
Westpac economists Ryan Wells and Pat Bustamante commented on the implications this would have for the Reserve Bank of Australia’s (RBA) decision making, stating that the Labour Force update provides “further confirmation that the labour market is indeed easing”.
“That said, in its February Statement on Monetary Policy, the RBA continued to assess the labour market as ‘tight relative to what is consistent with full employment’.
“More updates on the state of the labour market will be necessary before any material adjustment to that assessment occurs, especially given the seasonality associated with January’s figures,” they said.
The RBA recently revised their unemployment rate in the aforementioned Statement on Monetary Policy for the end of 2024 from 4.2 per cent to 4.3 per cent, however, Commonwealth Bank of Australia (CBA) head of Australian economics, Gareth Aird, said that still “looks too low” due to the expectations for growth to “be well below trend this year”.
“We see the unemployment rate rising to 4.5 per cent by end-2024. The recent speed at which the unemployment rate has risen will concern policymakers if it continues over coming months.
“We believe RBA rate cuts will be required this year to prevent the unemployment rate from rising much above 4.5 per cent,” Mr Aird said.
[RELATED: Mortgage repayments 'still rising': RBA]
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