Unemployment sticks at 4.1 per cent in January

Seasonally adjusted unemployment has held at 4.1 per cent for the first month of 2026, defying economists’ expectations that joblessness would tick up to 4.2 per cent. Australian Bureau of Statistics data released on Thursday showed the participation rate remained at 66.7 per cent as employment increased to 14,703,800. That was driven by 17,800 added jobs to the market. However, the employment to population ratio decreased slightly from 64 per cent in December to 63.9 per cent while the rate of underemployment – where a worker gets fewer hours than wanted – rose to 0.2 per cent to 5.9 per cent. Unemployment Figures Trend unemployment also fell from 4.2 per cent in December to 4.1 per cent in January, marking a decrease for the fourth consecutive month. Oxford Economics Australia head of economic research Harry Murphy Cruise said the data showed the labour market was still resilient. “The labour market started the year where it finished the last – strong and, in some pockets, strengthening further,” he said. “Unemployment held steady at 4.1 in January, with 17,800 jobs created and the number of unemployed falling by 1,900. “Full-time roles accounted for the bulk of the gains, underscoring the resilience in labour demand.” Noting this week’s wage data, which showed wages rose from 3.3 per cent to 3.4 per cent last quarter, Mr Murphy Cruise said “it’s clear the labour market still has a spring in its step”. “As a result, we’ve upgraded our outlook,” he said. “We previously expected unemployment to rise to 4.6 per cent by mid-2026; we now think that threshold won’t be reached until mid-2027.” He said “the message is clear” to the Reserve Bank, which this month broke a two-year streak and hiked interest rates to 3.85 per cent. “The labour market remains firm,” Mr Murphy Cruise said. “On its own, this strength doesn’t justify additional tightening beyond the hike we expect in May. “But if we find ourselves with a lineball decision later in the year, ongoing resilience in employment and wages could be the deciding factor that tips the board toward further tightening.” RBA governor Michele Bullock has previously highlighted the strength of the jobs market as “a positive” despite the pressure it puts on inflation and consequently interest rates. The RBA has a dual mandate for monetary policy – keeping inflation within its target range of 2-3 per cent and maintaining full employment. RBA governor Michele Bullock has hit back at Nationals senator Matt Canavan after he suggested she was gaslighting Australians on the state of the economy. “I understand that some people are doing it tough. I do understand. I get letters and I read them,” she told a senate estimates hearing last week. “But that is not to say that you can’t recognise that there are some parts of the economy that are doing well and the labour market, I think, has been a really positive thing for this country.” Reacting to the ABS release, Assistant Treasurer Daniel Mulino said a stronger labour market was a good sign but stopped short of predicting if the RBA would lift rates. “I certainly wouldn’t be speculating on what the next rate movement will be,” he told Sky News. “I think it’s welcome that we see continued strength in the labour market. “The unemployment rate remained at 4.1 (per cent), which is historically a low rate, but we’ve seen growth in the number of employed people, which is a very welcome thing.” He also brushed off concerns that much of the job growth in recent years had taken place in the public sector. “We need to see jobs growth right across our economy,” Mr Mulino said. “And if you look at jobs growth in the public sector, it’s in a lot of areas where people are wanting to see services strengthened and supplied in the care economy and health care in the NDIS. “So that’s also something that’s very important given our changing demographics.”