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MNI BRIEF: Aussie Jan Unemployment Rate Rises, Jobs Fall

(MNI) Perth

Australia's unemployment rate jumped to its highest level since May as the economy shed jobs for a second month in January, offering the Reserve Bank of Australia some relief given its concerns about the risk of a wage-price spiral.

The jobless rate rose to 3.7% from 3.5% as employment fell 11,500, following on from the loss of 14,600 jobs in December, according to the Australian Bureau of Statistics. It was the first back-to-back month of job losses since 2021.

The ABS noted that along with a larger-than-usual increase in unemployed people in January, there was also a larger-than-usual rise in the number of unemployed people who had a job to go to in the future. The Australian dollar fell sharply after the data was released. (See AUD : A$ Falters Post Jobs Miss)

RBA Governor Philip Lowe told a Senate committee on Wednesday he was not "overly worried" about a wage-price spiral as wage outcomes were consistent with inflation returning to target and businesses expect to offer small wage increases next year.

"I think it's relatively low [the risk of a wage-price spiral]. If we're wrong on that the costs are very high," Lowe said. "If we saw that develop then we're going to have higher interest rates and more unemployment." (See MNI BRIEF: RBA's Lowe Says Rates Not At Peak Yet)

Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Robert covers RBA and RBNZ policy and the economy for MNI in Australia.

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