Unemployment rate jumps to 5.3pc in January

Australia’s jobless rate rose more than expected to 5.3pc in January, despite the creation of 13,500 new roles.

A Centrelink office in NSW. Picture: AAP

The unemployment rate jumped to 5.3 per cent in January, up from 5.1 per cent in the previous month, seasonally adjusted data from the Australian Bureau of Statistics showed.

The lift in the jobless measure came despite the economy creating an additional 13,500 roles in the month, with a lift in the participation rate to 66.1 per cent from 66 per cent.

The consensus among economists was for the unemployment rate to lift to 5.2 per cent and for 10,000 new jobs to be created.

The Australian dollar fell after the data as the numbers stoked the case for further interest rate cuts later this year.

Reserve Bank of Australia Governor Philip Lowe has closely linked the interest rate outlook to the jobs market, saying recently that a material rise in unemployment would be met by further interest rate reductions.

The economy created 46,200 full-time jobs during through January, while part-time employment fell by 32,700, the ABS said.

Substantial spare capacity remains in the job market, containing wages growth. Underemployment jumped to 8.6 per cent in January from 8.3 per cent in December. Data Wednesday showed wages grew by a sluggish 2.2 per cent year-on-year. Wages have been flat over many years, subduing consumer confidence and deepening concerns about repaying record household debt.

Bushfires affected huge swathes of the country through January, with key coastal tourism towns badly affected at a time when many Australians would normally be enjoying beach holidays.

However the ABS said on Thursday there was “no notable impact” on jobs figures from recent bushfires.

The economy created a surprisingly high 67,000 jobs in November and December, helping push the jobless rate down from 5.3 per cent to 5.1 per cent and adding to a series of more upbeat economic signals which helped the Reserve Bank push back what had, late last year, been an expected rate cut at its first meeting of the year in February.

Figures released on Wednesday showed Australian wages grew by 2.2 per cent in 2019, well below the 3.1 per cent long term average. Economists suggested there was little evidence that a lift in pay packets was in sight.

The RBA's Dr Lowe has identified an unemployment rate of 4.5 per cent as the threshold at which wage pressures would emerge, but has also said that he is for now not prepared to cut rates to get there, as monetary policymakers weigh the potential costs to even more stimulus when rates are already at very low levels.