Australia's unemployment at 18-month high

Unemployment rate stays steady despite the biggest monthly loss of jobs outside of COVID since 1993.

By Ahmed Azzam | @3zzamous | 18 January 2024

Market open
  • Australia's unemployment holds at 18-month high, stagnating at 3.9% in December 2023.

  • OPEC forecasts a robust 1.85 million bpd increase in global oil demand by 2025, reaching 106.21 million bpd.

Australia jobless rate maintains 18-month high

Australia's labor market faced persistent challenges in December 2023 as the nation's seasonally adjusted unemployment rate clung to its 18-month peak at 3.9%. This marks the second consecutive month of stagnation and maintains the unemployment level at its highest since May 2022. The latest figures aligned with market expectations, reflecting a downturn in employment coupled with a decrease in the participation rate, which retreated from November's record high of 67.3%.

The unexpected drop in employment has raised concerns, contributing to the broader economic landscape. The participation rate's decline, indicating a shrinking labor force, suggests that individuals may be reconsidering their engagement in the job market. These developments highlight the delicate balance between economic recovery and persisting challenges in the post-pandemic era.

Amid the employment woes, Australia grapples with subdued consumer inflation expectations. January 2024 saw expectations holding firm at 4.5%, unchanged from December and representing the lowest level since January 2022. This stagnation comes against a backdrop of tightening financial conditions, which appear to have mitigated upward price pressures. Over the past year, a discernible general decline in expected inflation is evident, with the latest figure significantly below the 5.5% observed in January 2023. The lackluster expected wage growth further underscores consumer pessimism about the labor market's prospects, with a meager 0.9% growth anticipated over the next 12 months.

Oil edges higher on Middle East tensions

As Australia navigates economic uncertainties, global geopolitical tensions contribute to volatility in commodity markets. Crude oil, a key player in the commodities landscape, witnessed an uptick as WTI crude futures surged towards $73 per barrel on Thursday. This followed a sharp intraday rebound in the previous session, propelled by reports of US strikes in Yemen, amplifying concerns about a broader conflict and potential disruptions to the oil supply chain.

The Red Sea and Suez Canal have become areas of concern for oil tankers. This has led to vessels opting for longer alternative routes, inevitably raising shipping costs. Simultaneously, adverse weather conditions in the US have impacted oil production, with output falling by 650,000 to 700,000 barrels per day in North Dakota, a significant oil-producing state.

OPEC's latest monthly report adds another layer to the oil market narrative. The organization projects a robust increase in global oil demand, estimating a rise of 1.85 million barrels per day to reach 106.21 million bpd by 2025. Investors now keenly await the Energy Information Administration (EIA) data on US crude inventories to glean insights into the future trajectory of oil markets.