Full-time employment collapsed to its weakest point in 16 months in January after two months of gains were reversed, leaving Australia with 56,100 fewer full-time workers than in January 2015.
Total employment climbed just 0.9 per cent over the year to January, well below the Treasury forecast of 1.25 per cent for the year to June.
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Unemployment rate drops
January's jobless figures fell to 5.7 per cent despite a fall in full-time jobs. Video courtesy ABC News 24.
The unemployment rate slipped from 5.8 per cent to 5.7 per cent, helped by 5800 people abandoning the search for work.
"Hidden unemployment rose while official unemployment fell," said Bill Mitchell, director of the Centre of Full Employment and Equity at the University of Newcastle. "Overall, the market is weak and showing no signs of improvement."
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The most reliable measure of labour market strength - the employment to working age population ratio - remained steady at 60.9 per cent, well below the near-term peak of 61.4 per cent reached in late 2015.
"We had hoped that the January update would give us some confidence in a labour market recovery in early 2017," said Westpac economist Justin Smirk. "But it wasn't the case. Also, the return of female and part-time employment at the expense of male and full-time employment suggests the recovery in the manufacturing sector has run its course."
Female part-time employment climbed 4.6 per cent in a year in which male full-time employment stalled. Male part-time employment climbed 3.3 per cent.
"A lot of these employees are working part-time because they can't find full-time work," said Capital Economics chief economist Paul Dales. "It's restraining incomes and keeping wage growth low."
One bright spot in the release was an increase in the number of hours worked by those in jobs, taking total hours up 194.5 million from 1999.1 million, despite the slide in full-time employment.
Employment Minister Michaelia Cash said the market was "continuing to transition" and that employers were hiring in record numbers.
"Since the Coalition Government came to office in September 2013, the economy has created 534,000 jobs, representing an increase of 4.7 per cent," she said. The figures show all but 129,600 of those jobs have been part-time.
NSW has lost 31,500 full-time jobs in the past year and 5200 overall. Victoria has gained 160,000 full-time jobs and 112,800 overall. The NSW unemployment rate remains below Victoria's at 5 per cent compared to 5.7 per cent. Western Australia has the highest unemployment rate: 6.5 per cent.