* Jan employment rises by 29.1K vs 40K consensus
* Unemployment rate eases to 6.4% vs 6.5% consensus
* Hours work fell as more people than usual went on leave (Adds economist quote in paragraphs 6-8)
By Swati Pandey
SYDNEY, Feb 18 (Reuters) - Australian employment rose for a fourth straight month in January and the jobless rate fell by more than expected, an encouraging sign for the economic outlook after authorities were able to largely curb coronavirus outbreaks.
Figures from the Australian Bureau of Statistics (ABS) on Thursday showed employment rose a net 29,100 in January, on top of a 50,000 gain in December.
The jobless rate dropped to 6.4%, from 6.6%, better than market forecasts of 6.5% and down from a peak of 7.5% in July.
Employment has now rebounded 813,000 since May, leaving it 59,000 short of the level seen in March before much of the economy was shut down.
The gains were almost entirely led by the southeastern state of Victoria, which emerged from a lengthy virus lockdown late last-year.
"While January labour force is largely a Victorian story, the overall picture remains encouraging," said Su-Lin Ong, Sydney-based economist for RBC.
"Nevertheless, ongoing sustained above-average growth and employment generation will be needed to absorb excess capacity" and push the unemployment rate lower, Ong added.
"Until that is in sight, the RBA is likely to err on the side of more rather than less accommodation."
The Reserve Bank of Australia (RBA) has declared lowering unemployment a "national priority", promising to keep policy accommodative for as long as is needed to boost jobs, growth and inflation. its monetary stimulus measures, the central bank has slashed interest rates to near zero and launched a A$200 billion ($78 billion) bond-buying program. together with a A$300 billion fiscal stimulus plan, is bearing fruit, prompting the RBA to upgrade Australia's economic outlook earlier this month.
Thursday's gain in jobs contrasted with a 4.9% decline in seasonally adjusted hours worked as "more people than usual" took annual leave over the summer, said Bjorn Jarvis, head of labour statistics at the ABS.
"However, the number of employed people who worked zero hours in early January in the capital cities also reflects some ongoing effects of recent lockdowns in Sydney and Melbourne," Jarvis noted.
While Australia has largely controlled the coronavirus within its borders, small outbreaks have occurred in the country's biggest cities from quarantine hotels, resulting in short lockdowns.