Australia’s unemployment rate dropped in January, although a drop in the number of people counted in the labour force was largely responsible. The ABS released January employment estimates which indicated Australia’s unemployment rate fell from 5.8% to 5.7%. The total number of people employed in Australia in either full-time or part-time work rose by 13,500 during the month, in contrast with the market’s expectation of +10,000. Total hours worked grew by 0.6% over the month and are1.2% higher than the comparable number from January 2015.
Financial market reaction was mixed on the day. Bond yields barely moved; 3 year bond yields rose 2bps to finish the day at 2.04% while 10 year yields rose 1bp to finish at 2.83% and the Aussie slipped about 0.2 US cents to back under 77 US.
Despite the generally–positive numbers, there were two aspects of the report which disappointed some economists. The participation rate fell back from 64.7% to 64.6%, a reversal of December’s rise and a large fall in full-time jobs and a large rise in part-time jobs. As Janu Chan, a senior Economist at St George put it, “On a less positive note, job growth was entirely driven by the part-time job category, where jobs rose 58.3k. This came at the expense of 44.8k full-time jobs. The unemployment rate stepped down from 5.8% to 5.7% in January, although this was largely reflective of the participation rate edging down.”