Latest ABS figures show the labour market added 116,000 jobs defying signs of weakness since September
Office workers and shoppers walk through Sydney's central business district. Australia's unemployment rate recorded a surprise drop in February, according to the Australia Bureau of Statistics.Photograph: Jason Reed/Reuters
Australia's jobless rate dived to 3.7% in February as employers shrugged off signs of an economic slowdown to boost staff numbers by triple the level expected.
The unemployment rate last month fell from a seasonally adjusted 4.1% in January, the Australian Bureau of Statistics revealed on Thursday. Economists had expected the jobless rate to come in at 4.0%.
The economy added 116,600 – two-thirds of them full-time roles – in February compared with economists' forecast for a net gain of 40,000 positions.
The unexpected surge in employment lowered the jobless rate to where it was half a year ago, said Bjorn Jarvis, ABS head of labour statistics. A shift in the way people were entering the market affected the February result.
In 2022 and 2023, around 4.3% of employed people in February had not been employed in January, Jarvis said. In 2024 this was higher, at 4.7%, and well above the pre-pandemic average for 2015 to 2020 of around 3.9%.
The result dumbfounded economists, with Moody's Analytics' Harry Murphy Cruise describing the labour market as all topsy-turvy.
Employment is seesawing from month to month – but not because employers can't make up their minds or are second-guessing their hires, Murphy Cruise said. Instead, it reflects changes to the way and time we work throughout the year.
Recent monthly labour force movements are gobbledegook, he said, adding the trend figures offered a clearer picture of a jobs market that was ever-so-slowly weakening.
The participation rate was 66.7%, an increase from the revised 66.6% rate in January. Hours worked rose 2.8%, or 53m, reversing a similar slide in the first month of 2024.
Australia's economy slowed to a crawl in the final three months of 2023,growing just 0.2%, as 13 interest rate rises by the Reserve Bank to quash inflation took their toll.
The labour market had been weakening since September, when the jobless rate was 3.6%, although that level was close to half-century lows. The RBA's February forecasts has the unemployment rate creeping higher to 4.2% by June and 4.3% by the year's end.
Earlier this week, RBA governor Michele Bullock indicated a rapid increase in unemployment could prompt the central bank to start cutting its key interest rate provided inflation continued on its slowing path towards a 2%-3% target range.
The judgment at the moment is that the labour market is still slightly on the tight side, and that's on the basis that the unemployment rate is still much lower than it was pre-pandemic, Bullock said on Tuesdayafter the RBA left rates steady for a third meeting in a row.
We're keeping a keen eye also on employment numbers, because as I've said before, we want to hold on to as many gains in the labour market as we can, she said.
Tuesday's figures were interpreted by investors to imply the RBA will be less likely to cut interest rates soon. The dollar rose to 66.06 US cents from about 65.95 US cents prior to the release. Stocks also pared their gains for the day from about 0.6% to slightly more than 0.4%.
The treasurer, Jim Chalmers, said the jobs figures were a remarkable result.
Despite everything that's coming at us from around the world, inflation is moderating and our labour market remains one of our greatest strengths with unemployment remaining below its pre-pandemic average and participation at near record highs, Chalmers said, adding the government expects conditions to soften.
Ben Udy, lead economist for Oxford Economics Australia, said the recovery in employment in February was stronger than we, or anyone else had forecast, and highlights the continued tightness of the Australian labour market.
These data clearly challenge the view that monetary policy is providing enough of a drag on the economy to bring down wage growth and inflation, Udy said.
The labour market results varied widely across the country.
South Australia's unemployment rate dropped to 3.2% from a reported 4% in January. New South Wales also saw a big decline, with the rate falling to 3.6% from 4.1%.
Western Australia also posted a big slide – 0.6 percentage points – to 3.6%, with Queensland also easing to 3.9% from 4.2%.
The laggards were Victoria, where the rate was steady at 3.9%, and Tasmania – which goes to the polls this Saturday – also moving sideways to 4.5%. The Northern Territory posted a rise in the jobless rate to 4.4% from 3.9%, while the other territory (ACT) notched a slightly lower rate of 4.2% from January's 4.3% pace.
The jobs bonanza in February came as the nation added almost 550,000 net migrants in the year to September, the ABS said in a separate release. About 145,200 more people arrived than left in the September quarter alone.
Welfare groups in particular were worried the RBA might wait too long for signs of a weaker labour market before taking an axe to interest rates.
Unemployment is the last domino to fall, Peter Davidson, an economist with the Australian Council of Social Service, said prior to today's data release. Once the number of vacancies is reduced, and employers have reduced working hours for part-time workers, then they start to lay people off or not take people on as quickly.
https://www.theguardian.com/business/2024/mar/21/australias-unemployment-rate-fell-to-37-in-february-despite-slowing-economy
