Unemployment rate 'good news' for the RBA ahead of February meeting, ASX falls for fifth-straight day, BHP lower on nickel operations review — as it happened

Hi Mitchel, unfortunately the ABS doesn't have that data.

As outlined by Phil Odonaghoe in a post below, we don't even know if the fall in participation was real or a reflection of changing economic patterns that have caught out the Bureau's seasonal adjustment, which takes time to adjust to changes in behaviour.

You know how I said the ABS jobs numbers for December likely contained a substantial element of statistical numberwang?

Well Phil Odonaghoe from Deutsche Bank agrees.

"Our immediate reaction is to dismiss the print as more noise than signal," he wrote.

Three reasons for that:

1. In outright terms, the drop in full-time employment in December is the second largest recorded in the 45 year history of the monthly labour force survey (after the April 2020 covid-affected print). As a proportion of the labour force, it is the fourth largest, after Apr-20 (covid), Dec-82 (recession) and Nov-1991 (recession). Notably, the drop in full-time employment in December 2023 is larger than any seen in any month during the GFC. Did the Australian economy just 'snap'? Unlikely.

2. The 0.5ppt decline in the labour force participation rate is the tenth largest in the 45 year survey history, and comes after the participation rate lifted to an all-time record high in November of 67.3%.

3. In light of those unusually large monthly moves, the ABS's own media release also suggests some statistical mischief is at play: "The strength in employment in October and November and the fall in December, reflected changes in the timing of employment growth in the last few months of 2023, compared with earlier years." In other words, the ABS appear to be suggesting that some seasonal shifts in hiring patterns may have contributed to the result."

He says the result is unlikely to influence the Reserve Bank greatly, but he was already expecting it to keep interest rates on hold in February anyway.

He also says he'll be looking at NAB's business survey for December, out next week, for additional information about the trends in employment last month.

Another day, another market close where the ASX finished lower — it dropped by 0.6% to 7,346 points.

It's the fifth-straight day the local market has finished lower, and today's close is the lowest for the ASX200 in 20 days.

As for the sectors, it was a mixed finish, with 9 out of the 11 finishing lower.

Real estate dipped the most (down 2.1%), followed by health care (-1.1%), energy (-1.1%), industrials (-1%) and materials (-0.9%).

The financial sector was the best performer, up 0.2% and rebounding off its recent decline.

As for the top five performers for the day:

• Emerald Resources +3.2%
• Life360 +3.1%
• Helia Group +2.7%
• Core Lithium +2.4%
• NIB +2.3%

And the worst performers during the session:

• Liontown Resources -10.7%
• Sayona Mining -6.4%
• Coronado Global -5.6%
• IGO -4.4%
• Champion Iron -4.3%

That's where we'll leave today's blog — thanks so much for following along throughout the day, or popping in to join the fun periodically.

Don't worry though, we'll be back to do it all again tomorrow!

Until then you can catch up on today's developments below, or download the ABC News app and subscribe to our range of news alerts for the latest news.

And if it's more information on today's unemployment results, Michael has you covered with this very informative wrap right here 👇

Even before today's numbers, the majority of economists (including those at the big four banks) had expected the Reserve Bank to stay on hold at its first meeting of 2024 on February 6, and probably to remain steady until it cuts rates in the latter half of the year.

But, for the first time in quite a while, the interest rate probability function on Refinitiv, based on money market pricing, has a rate cut as a possibility at the next RBA meeting.

Admittedly, it's a 0.6% possibility, versus a 99.4% near-certainty of the cash rate staying on hold at 4.35%.

But it is telling that a rate rise, which was until recently still being priced as a slim, but realistic prospect, is now totally off the table as most traders are concerned.

With 65,100 jobs being shed in the run-up to Christmas, the biggest monthly fall in three decades, outside of COVID lockdowns, who could blame them. It'd be a very brave, or very silly, central bank to hike rates again in the face of those numbers, even if they are probably mainly statistical noise.

I just had to post this excerpt from Rabobank global strategist Michael Every's latest note (rant), without comment:

"Indeed, in an age in which Harvard and other Western university literature, history, sociology, language, and even science curricula are being 'decolonised', economics is ironically immune; that's despite the fact that if there is any discipline full of biased, illogical, western-centric, oppressor vs. oppressed, Cantillon elite self-enrichment, it's not English Lit, but Econ 101.

"So, is there something structurally wrong with economics? Yes! There are the alternative Marxist, Austrian, or Post-Keynesian schools, yet none have platforms at universities: instead you will find the Marxists in every department but economics, and to the detriment of them all.

"In case it isn't clear, this isn't to bash the West: I am describing a zero-sum truth to the global system that would be just as badly and unfairly run by anyone else, if not more so – as we may find out at some point in the future. Neither is to cheer Marx: he has no solutions, just good critiques of parts of capitalism. We need fresh ideas badly, not bad ideas dressed up freshly."

Discuss.

Hi Nick, great question, but unfortunately we have to wait for the release of the detailed jobs data, next Thursday, January 25, to get answers to these questions from the ABS.

If I can, I'll try to give you an answer.

Fire away using the blue comments link at the top of the blog.

I'll be the first to confess that labour market statistics can be confusing if you don't speak the lingo — and even more confusing when you read that 65,000 people lost their jobs in December, but the unemployment rate didn't move.

The reason why we've seen the unemployment rate hold steady is all because of the fall in our participation rate (aka, there were fewer people actively looking for a job).

Callum Pickering, a senior economist at Indeed, has spelled it out in a couple of tweets:

So, not only have we seen the biggest single monthly fall in the number of people employed (outside of COVID) since February 1993 — we've also seen the biggest monthly change in our participation rate since 2001 in the same set of statistics.

Pretty wild.

The humble Apple iPhone is now the world's biggest selling smartphone for the first time, ending Samsung's 12-year reign as market leader.

Data from the International Data Corporation shows in 2023, Apple sold 234.6 million iPhones, compared to Samsung's 226.6 million.

That gave the US tech giant a massive 20.1% market share when it came to smartphones, nudging ahead of Samsung's 19.4%.

So what made the iPhone the best-selling smartphone last year?

Analysts say it all had to do with Apple's success of premium devices, an increasingly fragmented smartphone market for those that use Google's Android system, and the success of Huawei's options in China eating into Samsung's sales.

You can read more on this story below:

I thought I couldn't remember a bigger monthly fall in the number of employed people, outside of the COVID lockdowns, so I went and crunched some numbers in the ABS excel spreadsheets to check.

It's no wonder I couldn't remember it because I wasn't even 10 years old the last time the official ABS seasonally adjusted data showed Australia shedding more jobs — 68,940 in February 1993.

Of course, that was the fallout from "the recession we had to have", which left unemployment elevated for the best part of a decade.

So let's fervently hope that the surge in job losses during December was unusually large statistical numberwang, and not the start of a trend like that.

ANZ senior economist Adelaide Timbrell has just been dissecting the latest jobs data on News Channel with my colleague Sam Yang, and says these numbers will be "good news" for the RBA ahead of their first meeting for the year next month.

She said that while an unemployment rate of 3.9% is still very low historically — and signals a very tight jobs market — the loss of 65,000 jobs in December doesn't mean the unemployment rate will be a concern yet.

"The fall in employment and the shift towards part-time work ... this tells us that the average household is going to have a little bit less income or there is going to be a higher share of households who are thinking more carefully about their money," she said.

"That is something that hits the economy in a big way. The Reserve Bank, by pushing interest rates higher is trying to slow the economy down, and when people are more likely to be working part-time, or thinking more carefully about their spending more carefully, that's going to be slowing both economic activity and inflation down.

"I think overall, this is good news for the Reserve Bank and, of course, bad news for those 65,000 people in December who went from having a job to becoming unemployed."

While the headline of a steady 3.9 per cent unemployment rate is great, many of the details of today's figures are highly unusual and disturbing.

The ABS data show 65,100 jobs being lost during December, which is the biggest seasonally adjusted monthly fall in jobs I can recall seeing in the data during my 16 years covering economics at the ABC — at least outside of the COVID lockdown periods, which are complete outliers.

Moreover, 106,600 full-time jobs were lost, and it was only the creation of 41,400 part-time jobs that softened the blow.

Hours worked also slumped by 0.5 per cent last month, reflecting that shift from full-time towards part-time.

To cap it all off, the only reason that the 65,100 jobs lost didn't push up unemployment above 4 per cent was that the participation rate also suffered the biggest monthly fall I can recall outside of COVID lockdowns, from 67.3 to 66.8 per cent in one month.

Participation rates typically move by 0.1 or 0.2 percentage points in a month, occasionally by 0.3, but very rarely more than that.

The ABS said that returned it to about September levels, which has me thinking that a big driver of today's huge moves is some statistical numberwang, either an issue with seasonal adjustment or a change in the sample group.

I wait now to see what the experts from the banks and investment houses make of these numbers.

Although unemployment is steady at 3.9%, the slump in the participation rate is a significant development out of the ABS data this morning.

David Taylor, who is the ABS's head of labour statistics, said the sudden drop off in the participation rate could be payback after a strong couple of months, but could also be due to statistical reasons.

"The fall in employment in December followed larger than usual employment growth in October and November, a combined increase of 117,000 people, with the employment-to-population ratio and participation rate both at record highs in November," he said.

He noted that while employment and unemployment fell, the seasonally-adjusted participation rate has returned to September levels, and the employment-to-population ratio is the lowest it's been since May 2022 — but is 1.9 percentage points higher compared to March 2020.

"The strength in employment in October and November and the fall in December, reflected changes in the timing of employment growth in the last few months of 2023, compared with earlier years," Mr Taylor said.

"While the December employment fall was large, the number of employed people was still 52,000 higher than September. Looking over the past 12 months, seasonally adjusted employment increased by an average of 32,000 people per month, showing reasonably strong underlying growth during 2023.

"Both the unemployment and underemployment rates remained relatively low and the participation rate and employment-to-population ratio relatively high, suggesting that the labour market remains tight."

Australia's official unemployment rate has remained steady at 3.9% December, but ABS figures reveal more than 65,000 jobs were lost during the month.

A slump in the participation rate from 67.3% to 66.8% prevented the fall in jobs translating to a rise in unemployment.

Economists had widely predicted the unemployment rate would remain at 3.9% again in December.

Hello from me! We're just under 10 minutes away from getting the latest unemployment rate and jobs data for December from the ABS.

I'll bring you the latest on the figures, the analysis from the experts, and the hot takes about what it might mean for the RBA from the experts.

Sit tight, and we'll see if unemployment sticks at 3.9% as economists and markets are predicting.

I'm off to get ready for the jobs data in just over half an hour, and leaving you in the very capable hands of Kate Ainsworth, who will also be posting about the jobs figures in this blog.

Just a quick note to explain to the more observant of you as to why some percentage price changes seem to dramatically change between our first market snapshot and our ASX open one around 10:30am AEDT.

That is because our Refinitiv settings reset the percentage change baseline shortly before the Australian trading day starts, so something that fell heavily overnight goes back to a 0% change at that time.

I have contacted Refinitiv to see if that can be changed and they are going to try and develop a workaround for us.

In the meantime, if you want to see the overnight price moves on things like gold, oil and Bitcoin, it is best to scroll down to the initial market snapshot.

The ASX has extended yesterday's modest fall, after a plunge on key Chinese markets yesterday afternoon and falls across Europe and the US overnight.

After losing 0.3% yesterday, the ASX 200 index is off a further 0.9% in early trade today, as investors dial back expectations of near-term interest rate cuts in the US and Europe.

The red spreads across the market, with 179 of the top 200 stocks falling in early trade and just 17 on the up.

Real estate is the worst performing sector, with the prospect of higher interest rates for longer not great for property developers and owners.

Basic materials (mining), industrials and energy were also on the nose, down 1% or more.

Even the companies making gains were making small ones, led by Domain's 1.6% rise to $3.26.

Kyle Rodda, an analyst at Capital.com, says markets will also again have an eye on China when its markets open later in the day.

"After yesterday's disappointing economic data, eyes remain on Chinese sensitive assets, especially as its stock market plunges to a fresh five-year low," he wrote.

BHP has released its production report for the half-year ended on December 31.

The highlights for the company were a 7% rise in copper production, with a record quarter at its Carrapateena mine in South Australia (acquired in its takeover of Oz Minerals), a 36% rise in energy coal output and a 4% rise for nickel.

The company added that it is evaluating options with its Nickel West operations to cope with the slump in prices for that metal.

Iron ore production fell 2% on the same time a year earlier, but rose 5% in the most recent quarter compared to the previous one.

The company also noted that it is progressing construction of its Jansen potash mine in Canada, and that it has also had positive exploration results for further copper deposits at its Olympic Dam mine in South Australia.

BHP shares were down 2% in early trade to $45.65, around double the fall of key rivals Rio Tinto and Fortescue, and with the mining sub-index as a whole down 1.4%.