Australia’s Unemployment Rate Rises to 4.1 Percent

A factory worker moves steel rods at the Multi Slide Industries manufacturing plant in Adelaide, Australia, on Aug. 12, 2013. Morne de Klerk/Getty Images

Australia’s unemployment rate has reached over 4 percent for the first time in two years as labour market conditions continued to soften.

According to the latest data from the Australian Bureau of Statistics (ABS), the jobless rate grew from 3.9 percent in December 2023, to 4.1 percent in January 2024, following a pause in November.

In contrast, the participation rate remained unchanged at 66.8 per cent.

ABS head of labour statistics Bjorn Jarvis said the lift in the jobless rate was due to employment remaining stable and unemployment rising by 22,000 people in January.

“This was the first time in two years, since January 2022, that the unemployment rate had been above 4 percent,” he said.

The new labour figures surprised economists and financial markets, who had forecasted an exact 4 percent rate, while expecting a 25,000 increase in employment.

The ABS said the higher-than-expected jobless rate could partly be explained by an unusually high number of people who were unemployed but planned to start a new job or return to the workforce soon.

Mr. Jarvis said the ABS had observed a similar pattern in the past two years.

“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,” he 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.”

Treasurer Says New Unemployment Figures Were Not Unexpected

While Treasurer Jim Chalmers acknowledged the rise in the unemployment rate, he said the government had predicted the change.

“What we’re seeing in these figures is that the market continues to soften in expected ways,” he said.

“We have seen our labour market weaken, but it has been weakening from a quite incredibly strong and resilient base.”

Pointing to the labour data in the past year, the treasurer was confident that the government could navigate the challenging economic conditions in the coming period.

“In the 46 years now since these monthly records were first kept, there has only been one calendar year where every month of the calendar year has had unemployment south of 4 percent, and that was the year just finished,” he said.

“So we enter this period of economic uncertainty from a position of genuine strength, and the labour market is a big part of that story.”

Sean Langcake, the head of macroeconomic forecasting at Oxford Economics Australia, said the weakening in the labour market was clearly underway, noting that there was a significant 2.5 percent month-on-month drop in hours worked.

The economist expected that there would be fluctuations in the way the labour market evolved in 2024.

“The swift weakening in labour market conditions raises some doubts as to whether we will see an orderly easing in conditions in 2024,” he said.

“Our outlook is for some consolidation in conditions in the coming months, but policymakers will be a little more concerned about the outlook after today’s data.”

Mr. Langcake forecasted that the jobless rate would continue to rise and peak at 4.5 percent in 2024.