Australia unemployment rate set to tick up in January as RBA keeps door open to further hikes
- The Australian Unemployment Rate is forecast to tick up to 4.2% in January.
- Australia is expected to have added 20K jobs in the month, fewer than the 65.2K gained in December.
- The bullish case for AUD/USD remains in place despite fading momentum.
The Australian monthly employment report is scheduled for release on Thursday at 00:30 GMT, and market participants anticipate a modest increase in jobs in January. The Australian Bureau of Statistics (ABS) is expected to announce that the country added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%, up from the 4.1% posted in December. The Participation Rate is seen at 66.8%, pretty much unchanged from the previous 66.7%.
The ABS reports both full-time and part-time positions through the monthly Employment Change. Generally speaking, full-time jobs entail working 38 hours or more per week, usually include additional benefits, and typically provide a consistent income. On the other hand, part-time employment generally means higher hourly rates but lacks consistency and benefits. That’s why the economy prefers full-time jobs. In December, Australia gained 10.4K part-time positions and 54.8K full-time ones.
Australian unemployment rate expected to tick higher in January
Australian employment data follows the Reserve Bank of Australia (RBA) monetary policy decision, which somewhat diminishes the impact of the figures, particularly given the RBA's decision to hike the Official Cash Rate (OCR).
Officials assessed inflation risks, noting that they expect it to remain above target for some time. Additionally, policymakers noted that different indicators suggest that labor market conditions remain “a little” tight. As a result, the Board increasedthe OCR by 25 basis points to 3.85%.
Data from December supported the decision, with headline inflation at 3.8% YoY, driven by stubbornly high services-related inflation and well above the RBA’s 2%-3% target. Wage growth in the last quarter of 2025 also surpassed the RBA’s goal, with the Wage Price Index up to 4.1% YoY.
RBA Governor, Michele Bullock, acknowledged that the decision has a negative impact on householders. “I know this is not the news that Australians with mortgages want to hear, but it is the right thing for the economy,” she said. “Based on the data we’ve seen and the conditions here and around the world, the board now thinks it will take longer for inflation to return to target, and this is not an acceptable outcome,” Bullock added.
Finally, the minutes showed that policymakers have not committed to further hikes but left the door open to additional tightening. Like most central banks around the world, the RBA announced decisions will be data-dependent and made meeting by meeting.
January's anticipated employment figures are hardly enough to prompt the RBA to reconsider its new rate policy, although it will keep the case of a tight labor market alive. Nevertheless, higher-than-anticipated job creation could fuel bets of additional interest rate hikes and fuel demand for the Australian Dollar (AUD). The opposite case is also valid, with a softer-than-expected outcome dragging the Aussie lower alongside odds for additional hikes.
When will the Australian employment report be released and how could it affect AUD/USD?
The ABS January employment report will be released early on Thursday. As previously noted, the Australian economy is expected to have added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%. Market participants will also be attentive to the breakdown of full-time and part-time positions.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair peaked at 0.7147 in the second week of February, its highest since January 2023. It currently trades in the 0.7070 region, following a corrective decline towards the 0.7000 mark. The bullish momentum receded, but the case for higher highs ahead remains alive and kicking.”
“The daily chart for AUD/USD shows it is trading well above bullish moving averages, with the 20-day Simple Moving Average (SMA) providing dynamic support at around 0.7010, further supporting the psychological level. Technical indicators, in the meantime, eased from their recent highs but remain in positive territory, with the Relative Strength Index (RSI) indicator consolidating around 63. Overall, the risk of a steeper decline seems well-limited,” Bednarik adds.
As for the pair’s near-term outlook, Bednarik says: “An upbeat report could push AUD/USD to 0.7100 and beyond, with near-term resistance at 0.7130. Steady gains beyond the latter expose the mentioned multi-month high in the 0.7140 area. A discouraging report, on the other hand, could see AUD/USD nearing 0.7000, although buyers are likely to reappear on approaches to it.”
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Economic Indicator
Unemployment Rate s.a.
The Unemployment Rate, released by the Australian Bureau of Statistics, is the number of unemployed workers divided by the total civilian labor force, expressed as a percentage. If the rate increases, it indicates a lack of expansion within the Australian labor market and a weakness within the Australian economy. A decrease in the figure is seen as bullish for the Australian Dollar (AUD), while an increase is seen as bearish.
Read more.Next release: Thu Feb 19, 2026 00:30
Frequency: Monthly
Consensus: 4.2%
Previous: 4.1%
Source: Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) publishes an overview of trends in the Australian labour market, with unemployment rate a closely watched indicator. It is released about 15 days after the month end and throws light on the overall economic conditions, as it is highly correlated to consumer spending and inflation. Despite the lagging nature of the indicator, it affects the Reserve Bank of Australia’s (RBA) interest rate decisions, in turn, moving the Australian dollar. Upbeat figure tends to be AUD positive.
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