Australia added 17.8k jobs in January, slightly below expectations of 20.3k, but the details were firm. Full-time employment rose a strong 50.5k, while part-time positions fell -32.7k. Unemployment rate held steady at 4.1%, undershooting forecasts for a rise to 4.2%, with participation unchanged at 66.7%. Monthly hours worked increased 0.6% mom, reinforcing signs of steady labor demand.
The composition matters. The shift toward full-time employment and higher hours worked suggests underlying strength rather than softening. Taken together, the data indicate the labor market remains relatively tight, with the economy still operating close to capacity.
From the RBA’s perspective, the failure of employment conditions to weaken keeps inflation risks front and center. A cooling labor market would have allowed policymakers to shift focus toward growth risks. Instead, today’s figures reinforce the view that wage pressures may remain sticky.
The base case remains for another 25bps rate hike in May, pending Q1 CPI confirmation. Whether further tightening is needed beyond that remains an open question. But for now, the labor market is not providing the RBA with any comfort that inflation pressures will fade on their own.
