Jump in Australian unemployment rate to partly reverse

The 12k decline in employment in January should be seen in the context of the 34k average increase over the previous three months. This is equivalent to an annualized rate of 3.5%, clearly an unsustainable rate given the moderate pace of output growth.
 
In other words, not to believe that this was a sign that the labour market has suddenly deteriorated strongly.
 
Meanwhile, the 0.3pp increase in the unemployment rate to 6.4% was also driven by a further increase in the participation rate, bringing the increase to 0.19pp over three months - a development that would normally be expected to be observed in a labour market recovery.
 
Societe Generale notes in a report on Wednesday:

• In February, we expect employment to have resumed its upward trend with a gain of 16k, which would be slightly above the 2014 average (13k), and very close to the monthly increase in the population of 15 years and over at the current participation rate (18k).
• However, we still expect a 10k decline in the unemployment count because we believe the participation rate is likely to reverse part of the recent gains.
• All this said, the risks to our payroll forecast is probably skewed to the downside - even though it is close to the 15k median forecast - given the buoyancy of job creation in Q4 14.