Unemployment rate hit 4% in December

The number of unemployed people increased by 10,300 over the month, to 604,100, and was up 19,500 over the year.

The underemployment rate declined 0.1 percentage points, to 6%.

Monthly hours worked increased by 10 million over the month.

The context: The resilience in the labour market is a key source of focus for the Reserve Bank, given its dual mandate of stable inflation in the 2% to 3% target and full employment.

The strength of the jobs market throughout the past few years has surprised economists and continues to be a source of uncertainty for the timing of rate cuts. In particular because the RBA believes the non-accelerating inflation rate of unemployment is around 4.5%, a premise that some economists have been disputing.

This latest labour force read, alongside quarterly inflation figures due at the end of the month, are considered critical for the upcoming first RBA meeting of 2025.

What they said: "The number of employed people grew by 0.4% in December 2024, slightly higher than the average monthly rise of 0.3% during 2024. It was also higher than the average monthly population growth of 0.2% over the year," ABS head of labour statistics Bjorn Jarvis said.

"The employment-to-population ratio rose 0.1 percentage point to a new record of 64.5 per cent. This was 0.5 percentage points higher than a year ago and 2.3 percentage points higher than before the COVID-19 pandemic.

“The rise in both the number of people employed and unemployed also saw a further rise in the participation rate, that is the percentage of the population who are employed or unemployed.

"While there hasn’t been much change recently in the underemployment rate for young women, the rate for young men had been rising from mid-2022 to late 2023, when there was strong growth in employment and the number of job vacancies began to ease. However, this has since generally reversed throughout 2024, and their underemployment rate is now back to around where it was in late 2022."