Australia’s unemployment rate rises to 3.7% after more than 22,000 people lost their jobs in the first month of 2023
- Unemployment rose to 3.7 percent in January
- Highest since May 2022, when rate hikes began
Australia’s unemployment rate has risen to its highest level since the Reserve Bank began raising interest rates nine months ago.
The unemployment rate rose to 3.7 percent in January, ending an era of the lowest unemployment rate of 3.5 percent in 48 years, when 21,900 people lost their jobs in one month.
This was the highest unemployment rate since May 2022, when the RBA raised rates for the first time since November 2010, ending the era of the historic low cash rate of 0.1 percent.
Cassandra Goldie, CEO of the Australian Council of Social Service, said the rise in unemployment showed why the Reserve Bank had to pause its rate hikes.
Australia’s unemployment rate has risen to its highest level since the Reserve Bank began raising interest rates. The unemployment rate in January rose to 3.7 percent, ending an era of the lowest unemployment rate of 3.5 percent in 48 years as 21,900 people lost their jobs within a month (pictured a waitress in Sydney)
“Today we see the real and hard consequences of rapidly rising interest rates, with 21,900 people losing their jobs,” she said.
High inflation is a serious challenge and needs to be addressed, but we need a more nuanced approach to avoid pushing more people onto woefully inadequate income support.
“Now is the time for the RBA to pause on rate hikes and take stock.”
NAB now expects the Reserve Bank to raise rates three more times to a new 11-year high of 4.1 percent, which chief economist Alan Oster says could trigger a recession.
The Reserve Bank did not meet in January, but on February 7 raised interest rates for the ninth straight month to a new 10-year high of 3.35 percent.
This was the highest unemployment rate since May 2022, when the Reserve Bank hiked rates for the first time since November 2010, ending the era of the record-low rate of 0.1 percent (pictured is Canberra Governor Philip Lowe on Wednesday)
Borrowers with an average mortgage of $600,000 have seen their monthly payments increase 43 percent, or $997, to $3,303 since May, up from $2,306.
Treasurer Jim Chalmers said unemployment is likely to continue rising from historic lows as interest rates rise at a time of global turmoil.
“We expected an increase in the unemployment rate as a clear consequence of a slowing global economy, mixed with the impact of interest rate hikes in our own economy,” he said.
Inflation rose 7.8 percent last year, the fastest rate in 32 years and well above the RBA’s target of 2 to 3 percent.
ACOSS also wants the RBA to have a full employment target, with the Reserve Bank forecasting an unemployment rate of 4.25 percent by December 2024.
Dr. Chalmers said wage growth was not to blame for the high inflation, putting him at odds with the RBA.
“This inflationary threat that we have in our economy is not because workers are doing the wrong thing or too many wage increases,” he said.