34,500 more Australians joined the ranks of the unemployed in January according to the ABS jobs data.
That took the total of unemployed Australians to 795,200 and drove the unemployment rate back up to a cycle high of 6.4%.
Currency traders didn’t like the number, knocking the Aussie dollar back into the mid-76 cent region and interest rate traders now have 64% chance of the RBA cutting again in March.
Paul Bloxham, HSBC Chief Economist, suggested this afternoon that the market is on the money, “Given today’s labour market data and recent dovish RBA
commentary we expect another 25bp cash rate cut in March.” That’s a big call for a man who didn’t think the RBA would ease in February and shows the depth of growing market concern about Australian employment.
The big news in this release is the the big spike in the unemployment rate of 0.3% in the headline number to 6.4%. That’s getting close to the MYEFO expectation of a 6.5% peak and increases the chance Australian unemployment is likely to peak much higher than previously anticipated.
The last peak in 2001 was 7.2%.
While headline employment fell 12,200 the upward revision in the December jobs gains from 37,400 to 42,400 and the recent run of good releases mitigates against worrying too much about January’s losses.
The good news is there are still 11,668,700 employed. That’s just 12,200 less than the all-time high number of Australian employed recorded in December.
The ABS also reported aggregate monthly hours worked in January 2015 rose 8.2 million hours (0.5 per cent) to 1,607.6 million hours.
Like all Australian data lately there is a little bit in it for everyone.
The unemployment rate will weigh on consumer sentiment. But more Australians were working in January than at any other time in Australia’s history – except December 2014.
In the end it’s the unemployment rate the RBA will worried about. 6.4% almost guarantees another cut in the months ahead.