Unemployment rate remains steady at 3.5%

More people working reduced hours due to illness, report shows

Unemployment rate remains steady at 3.5%

Unemployment in Australia remained at 3.5% in December, the Australian Bureau of Statistics has revealed today.

The percentage is line with the updated  figure for November.

"With employment decreasing by around 15,000 people, and the number of unemployed increasing by 6,000 people, the unemployment rate remained steady at 3.5%,” said ABS head of labour statistics Lauren Ford.

"The seasonally adjusted participation rate fell 0.2 percentage points to 66.6% in December, back to around where it was in October. Despite this slight fall from its historic high, it finished the year 0.8 percentage points higher than its pre-pandemic level.

Employment and hours worked

According to the latest ABS labour force figures, seasonally adjusted employment decreased by 15,000 people (0.1%) in December 2022, following an increase of 58,000 people in November and average monthly growth of around 40,000 people between August and November 2022.

The employment to population ratio also decreased, down 0.2 percentage points to 64.3%. In historic terms, it continued to remain elevated, 1.9 percentage points above the pre-pandemic level.

Seasonally adjusted monthly hours worked decreased by 0.5% for the second consecutive month, following the peak in October.

"The falls in employment and hours worked in December followed strong growth through 2022, with an annual employment growth rate of 3.4% and hours worked increasing by 3.2%,” Ford said. "The strong employment growth through 2022, along with high participation and low unemployment, continues to reflect a tight labour market.

The ABS said even though hours worked grew during 2022, there continued to be more people than usual working reduced hours due to illness.

"In December, we saw the number of people working reduced hours due to illness increasing by 86,000 to 606,000, which is over 50% higher than we would usually see at this time of the year," Ford said.

Underemployment and underutilisation

The seasonally adjusted underemployment rate rose 0.2 percentage points to 6.1%, 2.7 percentage points below the pre-pandemic rate.

The underutilisation rate, which combines the unemployment and underemployment rates, rose 0.3 percentage points to 9.6%t in seasonally adjusted terms. This was 4.4 percentage points below March 2020.

Underlying trend data

The ABS said trend employment increased by 27,000 people (0.2%) in December 2022, and trend monthly hours worked increased 0.3%. These reflected a continuation of the pace of underlying growth in employment and hours worked seen during much of 2022.

Ford said the monthly trend employment increase of 0.19% cent in December was slightly above the average rate we saw in the 20 years before the pandemic, of around 0.16%.

"The growth rate in December was around half of what it was for the first half of 2022 (an average of 0.37% per month), and also slightly below the average for the second half of 2022 (0.21%. This shows the strong employment growth had moderated through the year, but was still above the long-term average.”