The surprise drop in Australia’s unemployment rate in December has proved an anomaly with the figure surging back up to 6.4 per cent in January.
While the participation rate stayed steady at 64.8 percent of the population, the official unemployment rate went from 6.1 to 6.4 per cent from December to January, and the number of people employed fell by 12,200.
The figures were somewhat worse than economists had expected, or perhaps hoped, and the Australian dollar reflected the disappointment, dropping to US76.63 cents.
After the RBA cut interest rates last week after concerns about the sluggish economy, these latest unemployment figures will fuel speculation of a second rate cut within months.
Commsec’s chief economist Craig James told The Age he thinks we’ll see another rate cut in the first half of 2015.
“On the basis of the continued softness of the job market, there seems no barrier to the Reserve Bank cutting interest rates again at the March board meeting,” he said.
“Simply, Australia is growing at a far slower rate than its potential.”
Unemployment rose in most states, with Western Australia the only state to show an improvement in job figures. South Australia’s unemployment rate soared to 7.3 per cent.