Australia's Labour Force Survey for January is on the docket today, due at 1130 AEDT. A strong report last time out saw the national unemployment rate fall to a 7-month low of 4.1% as employment surged by over 65k. Signs of renewed tightness in the labour market was a key factor in the RBA going on to hike rates by 25bps earlier this month. Markets are pricing in a further hike in the cash rate to 4.1%, but not until August. There were few surprises yesterday as wages growth matched market and RBA forecasts at 0.8% in the December quarter and 3.4% in annual terms. But the Labour Force Survey can often deliver the unexpected, especially during the peak summer holiday period.
January preview: Modest start to 2026 expected
Expectations are set modestly for today's report. Employment is forecast to moderate back to a 20k rise in January (range: -5 to 40k) after a very strong increase of 65.2k in December. As a result, the unemployment rate is anticipated to ease from 4.1% to 4.2% (range: 4.1 to 4.3%).
December recap: Strong close to year-end
Employment rebounded with its strongest increase in 8 months rising by 65.2k in December - much of it full time (54.8k) - after declining by 28.7k in November. This far exceeded expectations for a 27k rise. Employment rose by 73.8k across the final quarter of the year, lifting from just a 29.2k increase in the prior quarter.
That renewed strength in employment saw the unemployment rate fall unexpectedly to 4.1% after spending months in the 4.3-4.4% range. Backing this up to indicate that the labour market retightened, the underemployment rate declined from 6.2% to 5.7% and total underutilisation fell to 9.8% (lowest since April 2023) from 10.5%. There was also encouraging news on the supply side as labour force participation rose from 66.6% to 66.7%.
Total hours worked lifted 0.4% in December to be up by a respectable 0.6% over the quarter - though annual growth was subdued at just 1%. Over the past year, the part-time segment (2.1%) has led growth in full time hours (0.8%) by a wide margin.
