WA records lowest jobless rate: ABS

Western Australia's January jobless rate has risen to a seven-month high but the state still holds the lowest unemployment rate in the country, new figures show.

The state's unemployment rate rose from December's seasonally adjusted 2.9 per cent to 3.2 per cent, according to the Australian Bureau of Statistics.

Total employment in WA was down 21,900 to 1.155 million, seasonally adjusted, while full-time employment was down 2800 to a seasonally adjusted 840,800.

WA's participation rate fell from December's 69.3 per cent to 68 per cent, seasonally adjusted.

Nationally, the unemployment rate rose from 4.5 per cent to a 31-month high of 4.8 per cent in January, with total employment rising 1200 to 10.742 million, seasonally adjusted.

Full-time employment rose by 33,700 to 7.671 million and part-time employment was down 32,600 to 3.071 million.

The participation rate in January was 65.1 per cent, compared with 65.0 per cent in December.

Economists had expected total employment to decline by 18,000, a jobless rate of 4.7 per cent and a participation rate of 64.9 per cent.

South Australia had the highest unemployment rate out of the states and territories with 5.6 per cent followed by New South Wales at 5.4 per cent and Victoria at 4.8 per cent.

Queensland recorded a jobless rate of 4.4 per cent and Tasmania was 4.5 per cent.

ANZ senior economist Katie Dean said the rise in the national unemployment rate was more a reflection of a 0.1 percentage point jump in the participation rate to 65.1 per cent.

"The rise in the unemployment rate was driven by the increase in the labour force participation rate, so we shouldn't read too much into that," she said.

Ms Dean said aggressive interest rate cuts in late 2008, which took the cash rate to a then six and a half year low of 4.25 per cent in December, and the federal government's $10.4 billion October economic stimulus package had helped buoy the labour market.

"The policy stimulus measures are having an impact," she said.

Like most economists, Ms Dean expects the labour market to deteriorate later in 2009.

The ANZ employment series for January showed a decline in newspaper and internet job ads for the ninth consecutive month, which Ms Dean said pointed to a worsening jobs market.

"It's clear, from our survey on job ads, that labour demand weakened significantly in the final months of 2008 - that would lead to eventual job losses in the next couple of months," Ms Dean said.

HSBC chief economist John Edwards said the latest jobs report showed the tight labour market and skills shortages seen in 2007 and early last year remained in employers' minds despite the economic downturn.

"Unemployment is going to go up because we are not creating enough new jobs for new entrants into the workforce, but existing employment is showing a good deal of resilience," Dr Edwards said.

"It's suggesting that employers are still a bit reluctant to let staff go because they were so hard to find in the first place."

Dr Edwards expected the unemployment rate to reach 6 per cent by the end of the year and possibly rise further at the start of 2010.

He said the January jobs figures were consistent with the Reserve Bank of Australia's view on the labour market.

"The Reserve Bank commented in its statement on Friday that the Australian labour market was proving more resilient than expected and they would be confirmed in that view by today's numbers," Dr Edwards said.

"The very big news is that full-time employment was up so sharply after trending down for the last six months."

JPMorgan economist Helen Kevans said employment growth had declined to an annual pace of 0.9 per cent, the slowest since early 2004 and down sharply from three per cent recorded in February last year.

Ms Kevans said it was "very hard to believe" the economy added 33,700 full-time jobs in January, given the current economic climate.

"Indeed, industry anecdotes indicate that many firms shed full-time workers last month," Ms Kevans said.

"We, therefore, believe that the jobless rate provides the best reading on underlying labour market trends, rather than the full-time/part-time employment breakdown, which remains extremely volatile."

Ms Kevans said a rise in the participation rate was largely responsible for the the 0.3 percentage point increase in the jobless rate.

"More people are entering or staying in the workforce to try and make financial ends meet," Ms Kevans said.

JPMorgan expected the unemployment rate to reach nine per cent by the end of 2010.

"We suspect that labour force participation will be slower to decline, which will inflate the unemployment rate," Ms Kevans said.

"This is mainly because of elevated skilled migration flows and older workers staying in the work force longer than they had planned to compensate for the fact that their retirement nest-egg has dwindled."