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The unemployment rate remained at 3.9 per cent in December, but ABS figures reveal more than 65,000 jobs were lost during the month, the biggest fall since 1993 outside of COVID lockdown periods.
Key points:
- ABS data show the number of Australians in employment fell by 65,100 in December
- The number of Australians in part-time jobs rose, but not by as much as the 106,600 fall in full-time employed
- The unemployment rate remained steady at 3.9 per cent due to a slump in the proportion of people in work or looking for it
The seasonally adjusted decline of 65,100 employed people is the largest since more than 122,000 Australians lost work during COVID lockdowns in New South Wales, Victoria and the ACT in September 2021.
The record number of job losses was just over 584,000 in April 2020 during the national COVID lockdown.
Prior to COVID, you have to go back to February 1993, in the aftermath of "the recession we had to have", when employment fell by nearly 69,000 in one month.
Australia's population was much smaller then, so that was also a much larger fall in employment proportionately than last month's decline.
Although, again excluding COVID lockdowns, last month saw the biggest percentage fall in employment since March 2003.
Worse still, the slide in employment was entirely driven by a loss of full-time work.
The data shows 106,600 fewer full-time jobs existed in December when compared to November, but there were an extra 41,400 people employed part-time.
That was reflected in a 0.5 per cent drop in the number of hours worked last month.
A slump in the participation rate — the proportion of Australians aged 15 years or older either in work or actively looking for it — from 67.3 to 66.8 per cent prevented the drop in jobs translating to a rise in unemployment.
"Excluding the pandemic, it was the largest monthly movement in the participation rate since April 2001 and the largest monthly decline in participation in 35-years," noted jobs website Indeed's Asia-Pacific economist Callam Pickering.
Statistical payback?
ABS head of labour statistics David Taylor said the sudden December slump appeared to be payback after a couple of strong months, possibly due to statistical reasons.
"The fall in employment in December followed larger than usual employment growth in October and November, a combined increase of 117,000 people, with the employment-to-population ratio and participation rate both at record highs in November," he observed.
"With the fall in both employment and unemployment in December, the seasonally adjusted participation rate fell 0.4 percentage points to 66.8 per cent, back to around the September level.
"The employment-to-population ratio also fell, down 0.4 percentage points to 64.2 per cent. This was the lowest employment-to-population ratio since May 2022, but still 1.9 percentage points higher than March 2020."
Mr Pickering agreed that the labour market was still reasonably strong, with the number of employed people rising by more than 50,000 over the final three months of 2023.
"Australia's participation rate, as well as employment more generally, has been highly volatile in recent months," he observed.
"Consequently, we shouldn't put too much weight on a single set of disappointing December figures.
"It appears as though seasonal hiring patterns have shifted, which has led to stronger-than-anticipated employment growth in both October and November and weaker-than-expected growth in December."
Jobs market still 'tight' but 'softening is well underway'
Mr Taylor added that the more stable trend figures show the Australian labour market remains robust.
"Despite the 0.5 per cent decrease in employment in December, both unemployment rate and underemployment rate remained steady, indicating that the labour market continues to be relatively tight," Mr Taylor noted.
However, some other analysts are less optimistic about the state of the jobs market, such as Ben Udy from Oxford Economics Australia.
"While the unemployment rate was unchanged in December, employment collapsed and the softening in the labour market is now undoubtedly well underway," he wrote.
"We expect this softening to continue in 2024 and forecast the unemployment rate to approach 4.5 per cent by the end of this year."
ANZ senior economist Adelaide Timbrell told ABC News Channel that a gradual rise in unemployment is exactly what the Reserve Bank will be hoping to see and today's figures would be "good news" for the RBA.
"The fall in employment and the shift towards part-time work … this tells us that the average household is going to have a little bit less income or there is going to be a higher share of households who are thinking more carefully about their money," she said.
"That is something that hits the economy in a big way. The Reserve Bank, by pushing interest rates higher is trying to slow the economy down, and when people are more likely to be working part-time, or thinking more carefully about their spending, that's going to be slowing both economic activity and inflation down."