Australia’s unemployment rate unexpectedly rose to 3.7 percent for the month of January, according to data released by the Australian Bureau of Statistics (ABS). This was the highest jobless rate since May of 2022, when the Reserve Bank of Australia (RBA) started lifting its key interest rate from record lows.[0]
The participation rate fell 0.1 percentage points to 66.5 percent in January, down from the series high of 66.8 percent in mid-2022.[1] ABS initially reported a decrease of 14,600 jobs in December, however, with the seasonal drop of 11,500 jobs, the total reduction was revised to 20,000.[1] The employment to population ratio also decreased to 64 percent.[2]
Cassandra Goldie, the head of ACOSS, the peak body for a range of organizations that assist poverty-stricken and disadvantaged Australians, has stated that due to the weak data, Australia needs a “more nuanced approach” approach to battling inflation “that avoids pushing more people onto woefully inadequate income support,”.[0]
Analysts had expected the unemployment rate to remain at 3.5 percent, but it rose to 3.7 percent. As a result of more workers than normal taking annual leave in January, hours worked sharply decreased by 2.1 percent.[3]
Jim Chalmers, the Treasurer, declared that with growing interest rates in the midst of global unrest, unemployment is expected to keep climbing from its already-low levels.[4] Despite this, RBA Governor Philip Lowe is saying that interest rates are still expected to climb.[5]
The AUD/USD exchange rate on technical charts is nearing a significant horizontal support line that has been in place since mid-December, at approximately 0.6900.[6] A decline below would verify that the four-month-long bullish bias had weakened, revealing potential downside risks towards the December low of 0.6625, close to the bottom border of the Ichimoku cloud.[6]
The central bank expects the unemployment rate to reach 3.8 percent by the end of the year and 4.3 percent by the end of 2024, though these forecasts could be revised if the rate does not fall next month.[5] Most recently, the relative economic growth underperformance has weighed on AUD/USD and investors are now forecasting the RBA’s cash rate will rise by a bit over 75bps from 3.35 percent now.[1]
Overall, the Australian jobs report is due Thursday, February 16 at 00:30 GMT.[7]
0. “Australia’s unemployment rate has increased to 3.7 per cent” Daily Mail, 16 Feb. 2023, https://www.dailymail.co.uk/news/article-11756659/Australias-unemployment-rate-increased-3-7-cent.html
1. “Australia’s unemployment rate climbs to 3.7% in January, higher than economists expected” The Guardian, 16 Feb. 2023, https://www.theguardian.com/business/2023/feb/16/australias-unemployment-rate-climbs-to-37-in-january-higher-than-economists-had-expected
2. “Australian Unemployment Unexpectedly Jumps, Bond Yields Drop” Yahoo! Voices, 16 Feb. 2023, https://www.yahoo.com/news/australian-unemployment-unexpectedly-jumps-bond-005521581.html
3. “January jobless rate jumps to 3.7pc as rate rises start to bite” The Australian Financial Review, 16 Feb. 2023, https://www.afr.com/policy/economy/jobless-rate-jumps-to-3-7pc-as-rate-rises-start-to-bite-20230216-p5ckyp
4. “Unemployment rate rises to 3.7 per cent as treasurer warns of ‘difficult year’” Sydney Morning Herald, 16 Feb. 2023, https://www.smh.com.au/politics/federal/unemployment-rate-rises-to-3-7-per-cent-as-treasurer-warns-of-difficult-year-20230216-p5ckyr.html
5. “11,000 jobs lost as unemployment rises” Yahoo Finance Australia, 16 Feb. 2023, https://au.finance.yahoo.com/news/11000-jobs-lost-as-unemployment-rises-005846941.html
6. “Market update: Australian dollar slides after dismal jobs data” IG International, 16 Feb. 2023, https://www.ig.com/en/news-and-trade-ideas/market-update–australian-dollar-slides-after-dismal-jobs-data-230216
7. “Australian jobs report due soon – preview” ForexLive, 15 Feb. 2023, https://www.forexlive.com/news/australian-jobs-report-due-soon-preview-20230215/