Quick Bites | The job market in Australia eases

Domestic employment tumbled in December, boosting the odds of the Reserve Bank of Australia (RBA) pivoting to monetary easing. The economy shed 65,000 jobs, a largely unexpected outcome led by the biggest monthly drop in full-time employment since the height of the pandemic.

The seasonally adjusted unemployment rate remained at 3.9% in December, according to data released by the Australian Bureau of Statistics (ABS). The fall in employment followed larger than usual employment growth in October and November, a combined increase of 117,000 people, with the employment-to-population ratio and participation rate both at record highs in November. The seasonally adjusted participation rate fell 0.4% to 66.8%, back to around the September level. The employment-to-population ratio also fell, down 0.4% to 64.2%, the lowest employment-to-population ratio since May 2022, but still 1.9% higher than in March 2020.

Source: Bloomberg 


While the December employment fall was large, the number of employed people was still 52,000 higher than in September. Looking over the past twelve months, seasonally adjusted employment increased by an average of 32,000 people per month, showing reasonably strong underlying growth during 2023.

Both the unemployment and underemployment rates remained relatively low and the participation rate and employment-to-population ratio relatively high, suggesting that the labour market remains tight. The underemployment rate remained at 6.5% and the underutilisation rate remained at 10.3%, in line with November.

In trend terms, many of the key indicators still point to a tight labour market. However, the increasing unemployment rate since November 2022, along with the rising underemployment rate and a slowdown in the growth of employment and hours worked, suggest that the labour market is starting to slow. This contributes towards the case that the RBA is probably at its peak official cash rate, with the next move more likely to be down rather than up.

Disclaimer: Clime Asset Management Pty Limited | AFSL 221146 | ABN 72 098 420 770.  The information provided in this post is intended for general use only. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information contained therein. Please consider the relevant disclosure document/s before investing in one of our products. Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Investors risk losing some or all of their capital invested. Past performance of financial products is not a reliable indicator of future performance or returns.