Australia’s Unemployment Rate Increases to 3.7% Despite Interest Rates Set to Rise
By Economists were surprised as the growth of new jobs was more than anticipated, causing the unemployment rate in Australia to jump from 3.5% to 3.7% due to higher interest rates. The participation rate fell 0.1 percentage point to 66.5% as per Australian Bureau of Statistics jobs data for the month of January.[0] January saw 11,000 Australians become unemployed, causing the unemployment rate to move from 3.5 per cent to 3.7 per cent.[1]
The employment to population ratio decreased to 64% and underemployment remained steady at 6.1%.[2] It had been anticipated that the unemployment rate would stay at 3.5%, but it increased to 3.7%. Due to an unusually high number of employees taking vacation in January, the hours worked decreased drastically by 2.1%.[3]
“High inflation is a serious challenge and should be addressed, but we need a more nuanced approach that avoids pushing more people onto woefully inadequate income support,” said Cassandra Goldie, head of ACOSS, the peak body for a range of groups that help impoverished and disadvantaged Australians.[4]
Prior to the release of the ABS's January jobs report, investors were speculating that the RBA's cash rate will increase by slightly more than 75bps from its current position of 3.35%.[5] On Thursday, data revealed that employment had decreased unexpectedly for two months in a row, causing the Australian dollar to fall.[6] The unemployment rate rose to a level not seen since May of the previous year.[6]
The AUD/USD pair on technical charts is heading towards an important horizontal line of support which has been in place since mid-December around 0.6900.[7] If the market falls below its current level, it would indicate that the four-month period of upward momentum has ended, increasing the chances of the price falling to the December low of 0.6625, which is close to the bottom of the Ichimoku cloud.[7]
Treasurer Jim Chalmers noted that unemployment is likely to increase from its prior record low due to the growing interest rates in a period of international unrest.[8]
“This was the second consecutive monthly fall in seasonally adjusted employment but followed very strong growth during 2022,” ABS head of labour statistics Bjorn Jarvis said.[0]
Despite the increase in unemployment, Lowe predicts that interest rates will still go up.[9]
The central bank anticipates the unemployment rate to decrease to 3.8 percent by the end of the year and 4.3 percent by the end of 2024, although these estimates may be revised depending on the rate next month.[3]
0. “Jobless rate unexpectedly jumps to 3.7 per cent” The Queenslander, 16 Feb. 2023, https://theqldr.com.au/economy-business-and-finance/2023/02/16/economy-225/
1. “Australia's Unemployment Rate Rises as RBA Hikes Take Toll” MarketWatch, 16 Feb. 2023, https://www.marketwatch.com/story/australia-s-unemployment-rate-rises-as-rba-hikes-take-toll-30b8e2fc
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. “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
5. “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
6. “Dollar climbs on higher rate expectations, Aussie slides on jobs shock” CNBC, 16 Feb. 2023, https://www.cnbc.com/2023/02/16/dollar-climbs-on-higher-rate-expectations-aussie-slides-on-jobs-shock.html
7. “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
8. “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
9. “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
