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Lucky number eight for RBA with labour data

The Australian jobs market has seemingly cracked at last under the pressure from eight rate rises from the Reserve Bank.

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The January unemployment rate rose to 3.7% as the Australian Bureau of Statistics (ABS) said there was a larger-than-normal bump in the number of people out of work.

The ABS said the number of people in jobs fell by about 11,000, and the number of unemployed people increased by 22,000, lifting the unemployment rate by 0.2 percentage points.

Market forecasts had been for around 20,000 new jobs last month after the 15,000 fall in December.

The data saw the ASX rise sharply in the minutes after the 11.30am announcement and eventually close up around 58 points (0.79%).

The Aussie dollar sold off and fell back through 69 US cents to around 68.70 after the news from the ABS.

The Aussie quickly reversed the slip and climbed back over 69 US cents as traders realised the cooling wasn’t as dramatic as the first headlines suggested.

But was the rise in the jobless rate and the number of people unemployed as dramatic as investors thought?

Perhaps not – the fall was largely explained by people on leave and waiting for new jobs to commence.

The break up between full and parttime jobs was the reverse of what we saw in December when there was a rise in full time employment but a larger fall in part time work.

In January full-time employment decreased by 43,300 to 9,567,800 people and part-time employment rose by 31,800 to 4,154,100 people.

Hours worked fell as you’d expect but that was also due to the fact that people were changing jobs. Monthly hours worked were down by 2.1%, as a higher number than normal took annual leave in the first month of the year.

Underemployment didn’t change at 6.1% which is curious given the apparent rise in jobless numbers.

ABS head of labour statistics Bjorn Jarvis explained in the release:

“Along with a larger-than-usual increase in unemployed people in January, there was also a similarly larger-than-usual rise in the number of unemployed people who had a job to go to in the future.

“January is the most seasonal time of the year in the Australian labour market, with people leaving jobs but also getting ready to start new jobs or return from leave. This January, we saw more people than usual with a job indicating they were starting or returning to work later in the month,” Mr Jarvis said.

“Early January is the seasonal peak in people taking annual leave. As in 2021 and 2022, January 2023 again saw more people than usual taking annual leave. Around 43 per cent of employed people worked reduced or no hours because they were on leave, compared with around 41 per cent of employed people over the same period before the pandemic.”

At the same time the number of people off sick in January was lower than a year earlier (because there were more cases of Covid then) and around normal, according to the ABS.

So probably not the report that the market first thought it was getting.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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