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Unemployment rate at 5.5% in January

Source: WA Today

Employment notched up the longest streak of gains on record in January, while unemployment fell a tick and female participation in the workforce climbed to a record high.

Thursday’s figures from the Australian Bureau of Statistics showed 16,000 net new jobs were added in January, in line with forecasts and a solid result given it came on top of outsized increases in both December and November.

It was the 16th straight month of rises, the longest such run since the series began in 1978. Annual jobs growth of 3.3 per cent was more than twice the pace of US job creation.

One soft spot was a 49,800 drop in full-time jobs, though that followed an incredibly strong run over the past year.

The unemployment rate edged down to 5.5 per cent, from an upwardly revised 5.6 per cent in December, and has held between 5.4 and 5.6 per cent for nine months now.

 The participation rate remained elevated at 65.6 per cent, having climbed steadily over the past year as more women went looking for work.

With labour supply expanding to meet demand, there was less upward pressure on wages and inflation and thus no near-term trigger for a rise in interest rates from the Reserve Bank of Australia (RBA).

Just last week, the head of the central bank declared there was no strong case for a rate rise given wage growth continued to lag far behind job creation.

That outlook was reflected in the local dollar which dipped slightly to $US0.7918 on the data.

Interest rate futures showed little change in the odds of a rate rise, with a move by November seen as a 50-50 shot. A hike is still not fully priced in until March next year.

Leading indicators of labour demand remain healthy enough with business surveys and vacancies consistent with monthly jobs growth of 15,000 to 20,000.

Yet firms remains reluctant to pay more, in part because many say they cannot raise prices in the face of intense competition, particularly from new foreign entrants.

As a result recent wage deals across sectors, known as enterprise agreements, paid smaller increases than the ones they replaced, an unwelcome trend highlighted by RBA assistant governor Luci Ellis in a speech this week.

“These agreements usually last for a couple of years, so this will weigh on overall wage outcomes for a while,” noted Dr Ellis.

“There will probably be some lag between the reports of labour shortages and a generalised pick-up in wage growth.”

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