Australian unemployment rate remains steady at 3.5 per cent

Australia’s official unemployment rate has been updated as the very tight labour market continues.

The nation’s unemployment rate remained steady at 3.5 per cent in December despite nearly 15,000 jobs disappearing from the economy.

New figures from the Australian Bureau of Statistics reveal the official jobless rate sat at a revised 3.5 per cent in the final month of 2022.

The economy shed 14,600 jobs in December, according to the seasonally adjusted data, but the workforce participation rate also decreased from 66.8 per cent to 66.6 per cent.

Having a smaller proportion of Australians in the workforce allowed the overall unemployment rate to remain steady despite the loss of jobs.

ABS head of labour statistics Lauren Ford said the strong employment growth in 2022, high participation and low unemployment all reflected the tight labour market in Australia.

“With employment decreasing by around 15,000 people, and the number of unemployed increasing by 6000 people, the unemployment rate remained steady at 3.5 per cent (in December),” Ms Ford said.

The economy shed 14,600 jobs in December. Picture: NCA NewsWire / Nicholas Eagar

Data released last week revealed there were 444,200 vacant jobs across Australia in November 2022 – 94.9 per cent higher than figures released prior to the pandemic.

The continued strength in the labour market means the Reserve Bank is all but certain to raise interest rates again when its board meets early next month.

Economists are expecting the central bank to lift the cash rate – which guides interest rates set by lenders – by another 25 basis points in its ongoing quest to dampen inflation.

Betashares Capital chief economist David Bassanese said the modest decline in employment during December was consistent with some tentative signs of slowing in the labour market.

But he said the figures shouldn’t stand in the way of another RBA interest rate increase in February, given the evidence pointed to continued strength in underlying employment demand.

“Indeed, the 14,600 jobs decline followed average monthly gains of 40,000 over the past four months,” he said.

“Employment is still up a solid 3.4 per cent – a whopping 450,000 workers – over the past year.”

Treasurer Jim Chalmers is expecting jobs growth and inflation to ease in 2023 as the economy slows. Picture: NCA NewsWire / Martin Ollman

Treasury has been expecting inflation to have peaked at about 8 per cent in December and to moderate throughout 2023.

The ABS will release an inflation update next week.

Jim Chalmers said Treasury was also expecting an easing in jobs growth in 2023 as the combination of a slowing global economy and the impact of rising interest rates took hold.

“And we expect to see that in the unemployment rate in the coming months,” the Treasurer told reporters in Queensland after the ABS released its jobs data on Thursday.

Dr Chalmers said he was pleased by the amount of new jobs that had been created over the past six months as well as the unemployment rate being still in the “mid 3s”.

“On a daily basis, we are monitoring new data in our economy and new data in economies around the world,” he said.

Another comprehensive economic forecast is expected from Treasury in the next federal budget due in May.