Unemployment steady as Australia awaits next interest rate decision

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Australia’s unemployment rate held steady in January 2026, defying expectations and strengthening the case for another interest rate rise later this year.

New figures from the Australian Bureau of Statistics show the jobless rate remained at 4.1 per cent, instead of edging up as forecast.

Employment increased by 18,000, driven by a strong gain of 50,000 full-time jobs, even as part-time roles declined. Workforce participation eased slightly to 66.7 per cent, down from last year’s record high.

Underemployment ticked higher to 5.9 per cent, while overall labour underutilisation rose to 10 per cent. Youth underemployment also climbed to 14.8 per cent, reversing last month’s improvement.

The solid jobs result adds pressure on the Reserve Bank of Australia, which meets next in mid-March and is widely expected to keep rates on hold at 3.85 per cent.

However, most major banks are tipping a rate increase to 4.10 per cent in May, when fresh inflation data becomes available.

Economists say the labour market remains resilient. Oxford Economics notes that while one strong report won’t force immediate action, continued strength in jobs and wages could push the RBA toward further tightening later in the year.

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