Australian Unemployment Rate Holds Steady at 4.1% in January
Synopsis
Australia’s unemployment rate remained at 4.1 per cent in January, with almost 18,000 people securing employment during the month. The government described it as a sign of economic strength, though economists cautioned that it could help raise the prospect of another interest rate rise possibly as soon as March or May. The Reserve Bank, which lifted the rates earlier this month, is now on hold until fresh inflation figures are due next week.
Australia’s unemployment rate remained at 4.1 per cent in January, indicating the labour market remains robust. But economists caution that it could bring forward the Reserve Bank’s need to raise interest rates again.
Key Highlights
- Australia’s jobless rate held steady at 4.1% in January.
- About 17,800 people found new work during the month, and full-time employment was up by 50,000.
- Some workers, particularly in IT, are having difficulty finding work and worry that jobs are lost to artificial intelligence
Jobs Are Still Holding Up, But the Picture Is Mixed
Australia’s employment market remained stable in January, with the unemployment rate unchanged at 4.1% from December. Some 17,800 found jobs during the month. Full-time employment increased by 50,000 people, although that was partially offset by a decline of 33,000 in part-time work. Smooth out the month-to-month ups and downs, and the unemployment rate actually hit a nine-month low.
The government views that as a positive sign. Treasurer Jim Chalmers noted that average unemployment over the life of this government had been lower than at any other time in 50 years. Reserve Bank Governor Michele Bullock also said the job market was among the brighter spots in a complex economic picture, particularly when compared with other countries where unemployment has been far higher.
Not Everyone in the Economy is Doing Well
But to many Australians, the figures seem far rosier on paper than they really are. The job market out there is tough right now. The application has had some workers applying for months to no avail.
Job listings are rising in sectors including construction, transportation and manufacturing. But the picture is far grimmer for those working in technology. Many have given up looking, quietly or not, but still some are on the hunt saying things feel remarkably tight out there. That gap, between what the official data shows and what many people are actually experiencing, has increasingly become a point of tension, with some politicians accusing the Reserve Bank of painting too rosy a picture of how well the economy is performing.
What This Means for a Home Loan
The Reserve Bank cut interest rates three times last year, which brought relief to home loan-holders. But it reversed course earlier this month, raising rates from 3.6% to 3.85% after inflation began climbing again in the second half of 2025. Now, with the labour market still strong, economists say another rate increase seems more likely than not, maybe as early as March and almost certainly by May should data next week show that inflation is running hotter than expected.
It’s a simple argument, at its core: when more people are working, they spend more money and that has the potential to keep prices rising. The Reserve Bank’s job is to pull prices back down to a more palatable level, somewhere between 2 and 3%, and here’s the thing: as long as the employment market remains this strong, that tasks becomes more difficult. Attention will now turn to next week’s inflation figures, which could be the decided on whether or not Australians endure even higher rates in the coming months.
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