Australia’s unemployment rate edged up to 4.0 per cent in December, a rise of 0.1 per cent, as indicated by recent figures from the Australian Bureau of Statistics. Interestingly, this uptick occurred despite 56,000 additional people joining the workforce, showcasing a robust performance for the final month of the year.
Bjorn Jarvis, head of labour statistics at ABS, explained that while employment figures grew, the number of jobless individuals also increased by 10,000, resulting in the higher unemployment rate. The employment growth of 0.4 per cent in December was above the average monthly increase of 0.3 per cent for the year.
Prior to this report, investors had anticipated a 73 per cent likelihood of an interest rate cut by the Reserve Bank of Australia (RBA) in February. However, since the current unemployment rate is lower than the RBA’s earlier projection of 4.3 per cent, predictions for a rate reduction may be reconsidered. Ivan Colhoun, chief economist at CreditorWatch, posited that December’s employment data diminishes the urgency for a rate cut, although he acknowledged that a reduction remains feasible if core inflation remains subdued in the upcoming consumer price index report.
Meanwhile, two major banks foresee a potential decrease in the cash rate from 4.35 per cent as early as February, with others predicting cuts in May.