Jobless rate dropped to 6.4pc in January: ABS

Employment lifted by another 29,100 jobs in January, in a sign the robust post-COVID labour market recovery has rolled into 2021.

Australia’s jobs recovery extended into January, according to ABS figures. Picture: Ian Currie

A fourth straight month of job gains drove the national unemployment rate down to 6.4 per cent in January, from 6.6 per cent in December, led by a labour market recovery in Victoria that has nearly pushed employment in the state to pre-pandemic levels.

In a sign the robust post-COVID labour market recovery has rolled into 2021, the nation added 59,000 full-time jobs in the month, the seasonally adjusted figures from the Australian ­Bureau of Statistics showed, while part-time employment dropped 29,800. That left a net gain in employment of 29,100.

The number of employed Australians was 12,939,900 in January — still 59,000 below the nearly 13 million last March, but a fraction of the 872,000 drop in employment recorded early in the pandemic.

The Morrison government was quick to seize on the labour stats, which showed 93 per cent of jobs lost at the height of the pandemic had been regained by January.

Josh Frydenberg said the jobless rate “shows the remarkable resilience in the Australian economy” in the face of a once-in-a-century pandemic.

“Yes, JobKeeper is coming to an end in March, but the Australian labour market continues to be resilient as we taper off those payments and move to other support,’’ the Treasurer said.

“There are regions, there are sectors, there are many Australians who are still doing it tough, but the overall trajectory in our ­labour market has been in the right direction.”

Employment in Victoria climbed 1.3 per cent, leaving the number of jobs just 0.4 per cent shy of March 2020 levels. The state’s jobless rate fell 0.2 percentage points to 6.3 per cent. NSW did not record any lift in employment, however, and Queensland showed just 0.1 per cent growth after both state capitals implemented lockdowns in response to COVID-19 outbreaks.

Employment in NSW remains 1.2 per cent below pre-pandemic levels, while in the Sunshine State it was 0.7 per cent higher.

 

Despite the lift in employment over the month, economists were surprised by large 4.9 per cent fall in hours worked in January — easily the second largest fall in the history of the data.

ABS head of labour statistics Bjorn Jarvis said “the large seasonal falls in hours and employment in some of the states and territories may not point to labour market weakness, but may reflect last year was a tough year and ­people are confident enough they are willing to take some leave — particularly those working in their own businesses.”

Mr Jarvis noted that Victoria experienced less of a summer seasonal drop in hours, which would have helped it outperform other jurisdictions in January.

But KPMG chief economist Brendan Rynne said the contrasting labour market results in Victoria to the other two east coast states “closely mirrors the stringency of government policies adopted during January in ­response to the virus outbreak in Sydney”.

“The latest labour force figures represent a stark reminder of how virus outbreaks and subsequent lockdowns impact the recovery in Australia’s labour market,” Dr Rynne said. Victoria’s most recent “circuit breaker” five-day lockdown ended on Wednesday night.

EY chief economist Jo Masters said two consecutive months of falling employment in NSW suggested “the initial bounce back in employment has run its course”.

“While it seems likely that the pace of improvement in the labour market will slow in coming months as JobKeeper comes to an end and Victoria’s economy catches up, weak population growth should support an ongoing downward trend in the unemployment rate,” she said.

The ABS survey also revealed the youth unemployment rate ­remained at 13.9 per cent in January, while underemployment — which measures those working fewer hours than they would like — dropped sharply from 8.5 per cent to 8.1 per cent.