According to labour force figures published by the Australian Bureau of Statistics, unemployment in the ACT was a seasonally adjusted 4.4 per cent in January, a long way up on the pre-pandemic level of 2.9 per cent. It remains the lowest rate in the country by more than a percentage point.

Nationally, unemployment dropped from 6.6 per cent to 6.4 per cent, but the youth unemployment rate stayed at 13.9 per cent.

Economists had expected the jobless rate to have eased from 6.6 per cent 6.5 per cent.

The participation rate - the number of people working or looking for work - dropped 0.1 percentage point to 66.1 per cent.

The 2 per cent drop in the number of people employed in the ACT in January compared with December was the largest drop in the country. Underemployment was down in the ACT to 5.7 per cent.

"January 2021 was the fourth consecutive monthly rise in employment, as employment in Victoria continued to recover. Nationally, employment was only 59,000 people lower than March 2020, having fallen by 872,000 people early in the pandemic," Bjorn Jarvis, head of labour statistics at the bureau said.

"Nationally, employment was only 59,000 people lower than March 2020, having fallen by 872,000 people early in the pandemic."

The number of people in full-time employment increased by 59,000 in January, while part-time workers declined by 29,800, ABS figures show.

While still well above the 5.1 per cent rate seen before the coronavirus hit Australia's shores, unemployment is now comfortably below the 7.5 per cent level seen in July last year.

"In contrast to expectations three months earlier, the peak in the unemployment rate had probably already occurred," the minutes from the Reserve Bank's February board meeting said this week.

The central bank now expects the unemployment rate to decline to about 6 per cent by the end of 2021, before reaching around 5.25 per cent by mid-2023.

- With AAP