RBA interest rates watch: slight rise in unemployment to 5.4% in December, but as forecast

The unemployment rate increased marginally by 0.1 percentage points to 5.4% in December,  according to figures released today by the Australian Bureau of Statistics (ABS).

This was in line with consensus forecasts.

The December data release included upward revisions to the November unemployment reading with job gains upwardly revised from 13,900 to 17,100 jobs while work hours were also revised up in November, now showing 0.8% growth rather than 0.1%.

"In short, the job market remains resilient," says CommSec economist Savanth Sebastian.

The Commonwealth Bank had forecast the unemployment rate to remain unchanged at 5.3%.

Commonwealth Bank chief economist Michael Blythe says the RBA pays “a lot of attention to the jobs data". 

"It is the one monthly statistic that covers the whole economy.

“Trends in the unemployment rate are a good near‑term predictor of RBA rate moves,” he says.

Economists tipping multiple cuts in the cash rate this year are forecasting a rise in unemployment to around 5.7% over the course of the year along with lower economic growth.

According to the ABS, the number of people employed decreased by 5,500 to 11,538,900 in December.

The decrease in employment was driven by decreased full-time employment, down 13,800 people to 8,112,500 and was offset by increased part-time employment, up 8,300 people to 3,426,400. The increase in part-time employment was driven by an increase in male part-time employment.

The number of people unemployed increased by 16,600 people to 656,400 in December, the ABS reported.