The Australian unemployment rate held steady at a 13-year low of 4.2 per cent in January, while the number of people employed rose by 12,900.

But there was a big 8.8 per cent drop in the numbers of hours worked during January as a result of the impact of the surge of COVID’s Omicron variant.

Australian Bureau of Statistics head of labour statistics Bjorn Jarvis said the decline in hours worked reflected more people than usual taking annual leave and sick leave in the first two weeks of January.

“This was a period with high numbers of COVID cases associated with the Omicron variant, and considerable disruption across the labour market,” Mr Jarvis said.

“Nationally, and in NSW and Victoria, the number of people who worked reduced hours because they were sick was around three times the pre-pandemic average for January. In other states and territories, it was twice as many people.”

Consultants EY said the January figures represented the lowest monthly level of hours worked in the economy since May 2020.

“The impact of lost hours worked and partial closure of firms who couldn’t find sufficient workers is evident by the split of jobs – with full-time employment falling by 17,000 while part-time rose by 30,000,” chief economist Jo Masters said.

However, she said Thursday’s data offered confidence the economy will bounce-back in coming months, with the labour market set to tighten further.

Other data shows demand for workers remains strong. Online jobs platform Seek said it logged the highest number of job advertisements on its site in its 25 years in January.

Seek’s January figures represent a 4.9 per cent rise from December and an almost 40 per cent increase compared to January 2021, before COVID-19 vaccines were available.

The job ad numbers published on Thursday were particularly strong in Western Australia, where strict border controls have severely limited the number of people moving in to the state.

Both the Reserve Bank and Treasury are predicting a jobless rate below 4 per cent later this year, a level not seen in some 50 years.

However, falling unemployment and recent strong inflation figures have raised speculation of a rise in the RBA’s cash rate from its record low 0.1 per cent.

Asked at a Senate hearing on Wednesday night if the cash rate could go up in the next 12 months, RBA deputy governor Guy Debelle said: “I think it is possible, I’m not sure that is inevitable.”

Reiterating comments made last week by governor Philip Lowe, Dr Debelle said there were different scenarios .

“At some point [rates] will be higher. In the end, it is going to depend on how things evolve,” he said.

Meanwhile, the Morrison government’s must trumpeted JobMaker hiring scheme, that was supposed to support 450,000 jobs, has failed to live-up to its promise.

Treasury officials told the Senate estimates hearing that to-date the program – which was announced in the 2020 budget – had helped create only 7357 jobs since October 2020.

It was originally going to cost $4 billion, but at the last budget it was revised down to $93 million.

Treasury is working on another downward revision for next month’s federal budget.

-with AAP