Unemployment rate nudges slightly higher in December

The latest Labour Force figures have revealed that the unemployment rate rose by 0.1 per cent to 4 per cent in December, according to the Australian Bureau of Statistics (ABS) in seasonally adjusted terms.

The number of employed people increased by 56,300 month on month (up by 0.4 per cent) to 14,584,400, while the number of unemployed people rose by 10,300 (1.7 per cent) to 604,100.

Bjorn Jarvis, ABS head of labour statistics, said: “The number of employed people grew by 0.4 per cent in December 2024, slightly higher than the average monthly rise of 0.3 per cent during 2024. It was also higher than the average monthly population growth of 0.2 per cent over the year.

“The employment-to-population ratio rose 0.1 percentage point to a new record of 64.5 per cent. This was 0.5 percentage points higher than a year ago and 2.3 percentage points higher than before the COVID-19 pandemic.

“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.”

According to Jarvis, the participation rate reached a record high of 67.1 per cent in December, sitting 0.5 percentage points higher than a year ago and 1.6 percentage points higher than March 2020.

Callam Pickering, APAC economist at global job site Indeed, said: “The market continues to price in a high likelihood of rate cuts being delivered in early 2025.

“It’s difficult to square that away with what continues to be an incredibly strong job market, particularly a job market that is showing few signs of slowing down.

“The job market is much tighter than expected and proving to be more resilient than even the most optimistic economy-watcher might have anticipated. This sort of labour market strength, coupled with what is otherwise a weak economy, will give the RBA plenty to think about when they meet in February.”

Pickering said that an early 2025 rate cut is still “premature” due to the battle against inflation still persisting.

“We’d like to see more progress with regards to service sector inflation and ideally some indication that productivity growth is improving. Not enough progress has been made on that front for the RBA to be confident in their ability to a) return to their 2-3 per cent inflation target and more importantly b) stay there,” he said.

“Nevertheless, the pressure builds on the RBA to make a move and if the quarterly consumer price index comes in relatively weak then it may prove difficult for the RBA to ignore.”

Krishna Bhimavarapu, APAC economist at State Street Global Advisors, said: “Unusually stronger labour markets due to temporary/seasonal factors were a bit of a global phenomenon recently, including the US and Canada.

“Today’s mean reversion in Australia’s unemployment rate restores some confidence that the labour market here is not as strong as the November data suggested. Overall employment rose more than the expected on a surge in temporary jobs, but full-time employment declined as expected.

“This could mean less turbulence for rate cuts through 2025. However, it may not entirely be smooth sailing and may face headwinds originating from US trade policy.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

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