Australia’s unemployment rate rose slightly to 4.0 per cent in December, raising hopes of a long-awaited interest rate cut when the Reserve Bank meets next month.

The jobless rate was up 0.1 per cent last month, according to new data from the Australian Bureau of Statistics, despite 56,000 more people joining the workforce – a fairly strong performance for the final month of the year.

“With employment rising by 56,000 people and the number of unemployed increasing by 10,000 people, the unemployment rate rose to 4.0 per cent,” ABS head of labour statistics Bjorn Jarvis said.

“The number of employed people grew by 0.4 per cent in December 2024, slightly higher than the average monthly rise of 0.3 per cent during 2024. It was also higher than the average monthly population growth of 0.2 per cent over the year.”

Before the jobs data came out, investors had pencilled in a 73 per cent chance of a rate cut during the RBA’s first meeting of the year in February.

Two of the four major banks believe the cash rate will be dropped from its current level of 4.35 per cent in February, while NAB and Westpac are both forecasting a cut in May.