Australia's jobless rate stayed flat in January as the momentum of last month's record figures slightly loses steam.

The seasonally adjusted unemployment rate stayed month on month at 4.1%, according to Thursday data from the Australian Bureau of Statistics.

The current jobless rate is lower than the markets' estimate of a 4.2% growth, which was also forecasted by ANZ and the Commonwealth Bank of Australia.

"Employed people grew by 18,000. Full-time employment rose by 50,000 people, partly offset by a fall of 33,000 people in part-time employment," Sean Crick, the ABS' head of labor statistics, said.

The actual number of employed people was lower than the 20,000 expected by the markets and way below the 40,000 that Westpac predicted.

The participation rate slipped 0.6 percentage points to 66.7%, while underemployment rose 0.2 percentage points to 5.9% during the month, with youth underemployment adding 1 percentage point to 14.8%.

The number of hours worked climbed to 0.6%, with full-time hours growing by 0.7% and part-time hours rising by 0.1%.

"This month, fewer people reported working less hours than typical Januarys due to being on leave," Crick said. "This contributed to hours worked growing more strongly than employment."

Analysts are optimistic that the jobs market will recover this year as it sets a stronger foothold, although it is still a little tight.

"Overall, our read is that labor demand is on a firmer footing, most evident in the employment-to-population ratio which has been flat in recent months compared to the downtrend in the first nine months of 2025," Westpac economist Ryan Wells said. "At the same time, the market sector has been picking up steam."

"The December print highlighted the risk that the labor market was strengthening at the end of 2025, and today's data confirms that this was the case with a gradual strengthening continuing in early 2026. This strengthening likely reflects the lagged effects of momentum building in the real economy over 2025," CBA senior economist Ashwin Clarke said.

ANZ economists Aaron Luk and Adelaide Timbrell predict that the Reserve Bank of Australia will keep the cash rate on hold at 3.85% amid the tightness of the labor market.

"Looking ahead, we still expect labor market conditions to ease through 2026," with our forecast that the unemployment rate will rise to 4.4% on average through the fourth quarter," Luk and Timbrell said.