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Australia’s labour market delivered a strong surprise in December, significantly outperforming expectations and reinforcing signs that economic conditions remain tight. According to official data released by the Australian Bureau of Statistics (ABS) on Thursday, employment growth accelerated sharply, the unemployment rate declined, and total hours worked reached a new record high.
Employment rose by 65,200 in December, more than double market forecasts of a 28,300 increase. This strong result followed a revised decline of 28,700 jobs in November, highlighting a sharp rebound in hiring activity. The gains were largely driven by full-time positions, with full-time employment increasing by 54,800 after a steep fall of 56,500 in the previous month. The data points to renewed strength in job creation across the economy, particularly in more stable forms of employment.
The seasonally adjusted unemployment rate fell to 4.1% in December, down from 4.3% in November and well below market expectations of 4.4%. Despite a decline of around 30,000 in the number of unemployed people, the participation rate edged up to 66.7%, broadly in line with forecasts and indicating continued engagement in the labour market. In trend terms, unemployment also ticked lower to 4.2%, reinforcing the view that labour market conditions remain firm.
ABS head of labour statistics Sean Crick noted that younger Australians played a key role in the improvement, with more people aged 15 to 24 moving into employment. This contributed to both higher employment levels and a reduction in unemployment. Meanwhile, total hours worked increased by 0.4%, matching employment growth and surpassing 2 billion hours for the first time on a monthly basis, a clear sign of strong labour demand.
Measures of labour market slack also improved. The underemployment rate fell by 0.5 percentage points to 5.7%, while the broader underutilisation rate declined to 9.8%. The stronger-than-expected December labour force report has strengthened expectations that the Reserve Bank of Australia may consider raising interest rates next month, as policymakers weigh persistent labour market tightness against inflation risks.
