Key Points:

The recession is biting harder on the labour market, with the unemployment rate jumping in the December quarter to a five-year high of 4.6 per cent.

It was one of those quarters when employment and unemployment both increased - by 21,000 and 10,000 respectively - and outstripped the rise in the working age population (11,000).

The reason was a jump - somewhat unexpected in the context of a softening labour market - in the participation rate.

That is the proportion of working people (everyone over 15) who
are either working or actively seeking a job and available to start one. It rose 0.6 percentage points to a record 69.2 per cent.

That is likely to fall, however, as more people get discouraged and withdraw from the labour force.

As it was, the rise in employment was soft, with 17,000 of the 21,000 increase consisting of part-timers.

Hours worked in the quarter were down 1.9 percent, on top of a 1.2 per cent decline in the September quarter.

Another measure of the underutilisation of labour rose: the proportion of part-timers who said they would rather be working more hours, jumped to 19 per cent from 16 per cent in the September quarter.

When set alongside the dire labour market readings in the December
quarterly survey of business opinion, today's data are unlikely to see economists pulling back their forecasts, which are clustered around an unemployment rate of 6.5 per cent by the end of the year.