Unemployment rate remains steady at 4.1%

In January 2026, unemployment remained the same month on month and year on year.

In its latest national Labour Force release (19 February), the Australian Bureau of Statistics (ABS) confirmed that the unemployment rate remained at 4.1 per cent in January 2026, staying steady month on month and year on year.

ABS head of labour statistics Sean Crick said: “Employed people grew by 18,000. Full-time employment rose by 50,000 people, partly offset by a fall of 33,000 people in part-time employment.”

The data revealed that employment increased to 14,703,800 in January 2026, rising month on month by 17,800 people and annually by 150,200 people.

Crick noted that this month, youth underemployment rose by 1 percentage point to 14.8 per cent, which largely reversed the fall recorded last month.

In addition, ABS data showed that in January 2026, the underemployment rate has increased to 5.9 per cent (up 0.2 percentage points month on month and down 0.1 percentage points year on year), revealing that the participation rate stayed the same (66.7 per cent) month on month, but decreased by 0.6 percentage points annually, and that the underutilisation rate growing by 0.2 percentage points to 10 per cent.

“The participation rate of 66.7 per cent was 0.6 percentage points lower than the record high measured in January 2025,” Crick said.

The ABS data revealed that the net change in the number of employed people in January 2026 was due to 426,000 people entering employment and 717,000 people leaving employment since the month prior.

This change follows December 2025, which saw 466,000 people enter employment and around 420,000 people leave employment.

The ABS also found that in January 2026, monthly hours worked in all jobs rose by 11 million month on month to 2,013 million (up 0.6 per cent) and increased by 32 million (1.6 per cent) annually.

“This month, fewer people reported working fewer hours than [in] typical Januarys due to being on leave. This contributed to hours worked growing more strongly than employment,” Crick said.

Further, ABS data showed that while full-time hours rose by 0.7 per cent in January 2026, part-time hours worked only rose by 0.1 per cent.

“On average, part-time employed persons worked more hours this month, with part-time hours worked per person increasing by 0.8 per cent. However, the total number of part-time hours worked only rose 0.1 per cent, with the number of people employed part-time falling 0.7 per cent,” Crick said.

Employment Hero chief executive and co-founder Ben Thompson said the increase in work hours does not just point to people picking up more shifts, but stronger utilisation.

“That’s good news for workers who want extra hours, but a steady unemployment rate tells us there is still fierce competition for jobs for those on the outside. That is going to complicate the case for near-term rate cuts,” Thompson said.

However, Thompson said these figures do not fully reflect what is happening in the SMB sector.

“Our data shows employers are increasingly paying for experience, even as more younger candidates enter the market. Hours worked by people aged 55 and over are up 1.2 per cent year on year, and this group is seeing the strongest wage growth at 5.9 per cent,” Thompson said.

“That suggests older Australians are being pulled into roles where capability and judgement are harder to replace.”

“It’s proving to be a resilient labour market with genuine momentum, but the gains are not evenly shared, and not everyone is getting the work they want.”