At the start of last year, few expected Australia’s jobs market to stay so strong.

Yet, that was exactly what the economy delivered.

What makes the resilience of the jobs market so impressive is that it occurred while the Reserve Bank continued its aggressive rate hiking campaign, squeezing borrowers a further five times in 2023.

But since its peak in December 2022, inflation has eased from 8.4 per cent to just 4.3 per cent in November.

At the same time, the unemployment rate has consistently hovered in a narrow range between 3.4 and 3.8 per cent, according to the Australian Bureau of Statistics.

Should we expect the good fortunes to continue in 2024, or can workers expect bosses to let them go while job opportunities dry up?

Economists say there are signs of fading momentum.

In November, the jobless rate rose to 3.9 per cent – the highest level in 18 months.

Total hours worked also did not change much in November, despite an extra 61,500 people in jobs, in a further sign the labour market is slowing.

The number of jobs ads has also fallen, plunging 17.5 per cent since its peak in November 2022 as the frenzied hiring and chronic workforce shortages that marked the coronavirus recovery continue to weaken.

However, job vacancies are still up by more than a third on their pre-pandemic levels, with eight in every ten occupations advertising more available positions, recent ANZ data revealed.

NAB’s head of market economics Tapas Strickland said jobs vacancies heading into the new year continue to remain elevated.

This is expected to stop employment growth trending higher in the first half of 2024 than it otherwise would have.

“That should continue to support a lot of the labour market strengths that we saw last year, continuing to this year,” Mr Strickland said.

He expects the unemployment rate will rise to 4.5 per cent by year’s end, outpacing the RBA’s forecast of an increase to 4.2 per cent.

Inflationary pressures have also shown further signs of moderating while Australia is expected to narrowly avoid a recession.

While Australians are unlikely to see the unemployment rate return to its ultra tight levels, economists suspect conditions in the jobs market could again see strong jobs growth, avoiding lay-offs.

“We don’t see outright job losses,” Josh Williamson, chief economist at Citibank said.

He added: “Instead, slower hiring and rising labour supply will be the catalyst for the pick-up in unemployment”.

“This is supported by the forward-looking indicators which all suggest that labour demand has eased, but employment growth is still expected to be positive,” he said.

Helping boost Australia’s labour supply is the phenomenally strong rate of net overseas migration, economists said, which surged by a record 520,000 in the 2023 financial year.

While this increase in the population will help create new jobs, the supply of new workers is likely to exceed the demand for them, pushing the unemployment rate higher still.

“Some areas which disproportionately employed migrants like hospitality, food service and retail – they might notice a little less favourable conditions for labour supply.

But as unemployment rises and the jobs market becomes less dynamic, economists expect wages growth, which surged to a 14-year high, will also hit the brakes.

“By the second half of this year, we should start to see wage pressure moderate a bit as the unemployment rate kind of moves into the mid-four per cent range,” Jarden chief economist Carlos Cacho says.

Clouding the outlook is the reluctance of some businesses to let workers go in the hope that economic conditions will improve, but offering them fewer hours.

This phenomenon, known as “labour hoarding” could also be masking some underlying weakness in the jobs market, Mr Cacho said.

“What you’re starting to see is in some areas [is] employers cut back the hours of their staff, rather than cutting absolute staff numbers,” he said.

“That could be a bit of a hangover from the pandemic where it was so hard to hire workers, that employers don’t want to lose the workers altogether, but they do want to kind of keep them somewhat attached.”

The underemployment rate — a measure of those who are in work but want additional hours — rose to 6.5 per cent in November.

If recessionary fears continue to abate and the economy grows more robustly than expected, more bosses are likely to hold onto their staff and hire new employees.

While this could help the jobs market keep its footing, it risks adding further heat into the economy, pouring cold water on anticipation of early rate cuts.