Australia’s unemployment rate held steady at 4.1% in January 2026, defying economists’ expectations of a rise and signaling a tight, resilient labor market.

Employment increased by 17,800 in January, lagging market expectations of 20,000 and far below December’s surge.

The upbeat jobs data comes as the Reserve Bank of Australia has lifted the cash rate to 3.85% recently, with signals of possible further tightening to curb inflation.

Participation rate remained at 66.7%, with total employment at about 14.7038 million.

Overall, the data point to a resilient labor market with potential for gradual tightening if wage growth holds and employment remains robust.

Full-time employment rose by 50,500 while part-time employment fell by 33,000, indicating a shift toward more full-time hiring and adjustments in hours.

Wages rose 3.4% year over year in the December quarter, reinforcing the view of a still-tight labor market.

Labor force participation eased slightly to 66.7% after hitting record highs, trimming the size of the active workforce.

Underemployment edged up to 5.9%, while the employment-to-population ratio slipped slightly to 63.9%.

Hours worked rose 0.6% in January, with full-time hours up 0.7%, suggesting employers relied on existing staff rather than cutting hours.

Real wages fell 0.4% as inflation outpaced wage gains, with CPI rising 3.8%.

Analysts at Oxford Economics revised the unemployment forecast higher, expecting 4.6% by mid-2027 rather than mid-2026.