SYDNEY, Jan 19 Reuters Australia employment unexpectedly dipped in December following an outsized gain the month before in a sign the redhot labour market might be cooling, though the jobless rate stayed near fivedecade lows.

Figures from the Australian Bureau of Statistics ABS on Thursday showed net employment fell 14,600 in December from November, when it surged by a revised 58,200, and missed forecasts for an increase of 22,500.

The market reacted by nudging the Australian dollar down 0.5 to 0.6906 , while threeyear bond futures gained 18 ticks to 96.980 to imply an yield of 3.02.

On the brighter side the jobless rate held at 3.5, just above the recent 48year trough of 3.4, while the participation rate dipped to 66.6 from a record high of 66.8 in November.

Fulltime employment remained robust with a rise of 17,600 jobs in December, while total job gains for the 12 months to December stood at a healthy 452,000.

The strong employment growth through 2022, along with high participation and low unemployment, continues to reflect a tight labour market, said Lauren Ford, head of labour statistics at the ABS.

This resilience is a major reason markets are still inclined to think the Reserve Bank of Australia RBA will raise its 3.1 cash rate by another quarter point when it meets next on Feb. 7.

Futures imply around a 60 probability of a rise, but also a 40 chance the RBA will pause given rates have climbed by 300 basis points since May and the full effect on mortgage…