Australia’s jobless rate is tipped to remain steady in December, amid expectations the housing market recovery will create jobs.

Unemployment is forecast to remain at 5.8 per cent when labour force figures for December are released on Thursday, according to an AAP survey of 14 economists.

The number of people with jobs is forecast to rise by 5,000 while the participation rate – the percentage of the working-age population either in work or looking for a job – is expected to remain steady at 64.8 per cent.

HSBC chief economist Paul Bloxham said the pickup in housing as well as retail sales would begin to flow through to job creation, curbing the unemployment rate before it reaches six per cent.

“We think the labour market is going to show some further signs of improvement in December,” Mr Bloxham said.

“We think the rebalancing of the Australian economy is happening very slowly but we do think it is happening and we think that’s going to start showing up in the labour market sometime fairly soon.”

But JP Morgan chief economist Stephen Walters says job creation in retail and housing won’t be enough to stop the unemployment rate from drifting above six per cent.

JP Morgan forecasts that unemployment will reach 6.5 per cent by mid-year.

“We do think there will be job creation in those sectors but just not enough to absorb the new entrants into the labour force,” Mr Walters said.

“We’ve seen business confidence really slump again after the post election bounce, so business is still in quite a cautious mood.

“Employment growth is just unlikely to be exceeding population growth in any sustained way.”

The upturn in housing would not be enough to balance the wind down in mining investment, National Australia Bank senior economist Spiros Papadopoulos said.

“We think there’s still going to be a hole left in the investment outlook and although the housing and construction part of the equation will be supporting growth, the other non-mining sectors will still be quite soft and not strong enough to offset the mining slowdown,” he said.

“We don’t think it’s going to be enough overall which is why we think the unemployment rate is going to head higher and why the Reserve Bank of Australia won’t be in a position to raise rates this year.”