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Highlights
- Unemployment rate rises to 4% in December, aligned with expectations.
- Job creation far exceeds forecasts, with 56,300 new roles added.
- Strong labor market performance keeps Reserve Bank policy in focus.
The Australian job market displayed a mixed yet impressive performance in December, as the unemployment rate edged up by 0.1 percentage points to 4%, meeting market expectations. Despite the rise in unemployment, the economy added a robust 56,300 new jobs, significantly surpassing the anticipated 15,000, demonstrating an enduring resilience in the labor sector.
Key Numbers
The participation rate, which measures the active workforce, rose to 67.1%, a 0.2 percentage point increase. While the number of unemployed individuals climbed by 10,300 to 604,100 during the month, the underemployment rate dipped by 0.1 percentage points to 6%. Meanwhile, monthly hours worked across the economy rose by 10 million hours.
This combination of rising participation and increased employment emphasizes the strength of the labor market. Notably, the employment-to-population ratio climbed to a record 64.5%, marking a 0.5 percentage point improvement over the previous year and a substantial 2.3 percentage point rise since the pre-COVID era.
Broader Economic Implications
The labor market's performance holds significant implications for the Reserve Bank of Australia’s (RBA) monetary policies, as it juggles its dual mandate of maintaining inflation within the 2–3% target range and achieving full employment. With the RBA estimating a non-accelerating inflation rate of unemployment at around 4.5%, the current unemployment figures suggest an ongoing debate about economic slack and the timing of interest rate adjustments.
Additionally, the December job figures come as a precursor to inflation data due later this month, a critical element influencing the RBA's first meeting of 2025. Investors across sectors, including those tracking (ASX:WES) and (ASX:CBA), are closely monitoring developments to gauge broader economic momentum.
A Surprising Resilience
The data underscores the remarkable strength of the Australian labor market despite economic uncertainties. The rise in employment not only outpaced population growth but also contributed to reversing underemployment trends seen in prior years, particularly among younger workers. This indicates that the recovery in labor dynamics remains robust, buoying confidence across various industries and stakeholders.
December’s employment data paints a picture of resilience in the Australian economy, with strong job creation offsetting concerns over rising unemployment. How these dynamics influence the RBA’s policy decisions remains a key focus as the year unfolds.
