Employment Declines, but Unemployment Rate Remains Unchanged
Australia’s unemployment rate stayed at 4.1% in February, despite a loss of 52,800 jobs, according to the Australian Bureau of Statistics (ABS). The labour force participation rate fell to 66.8%, down from a record 67.3% in January.
ABS head of labour statistics Bjorn Jarvis highlighted the impact of older workers not returning to the. “Fewer older workers returning to work in February contributed to the fall in employment this month,” he said.
However, It for people aged 15-54 continued to grow over the past year.
Unexpected Job Losses Amid Strong Labour Market
The drop in the came as economists had predicted an increase of 30,000 jobs. Despite the decline, employment remains 266,000 higher than in February 2024.
“While the to-population ratio fell 0.4 percentage points to 64.1% in February, it is still only 0.4 points below its historical high in December,” Mr Jarvis said.
The Reserve Bank of Australia (RBA) expects the unemployment rate to average 4.2% from mid-year and stay around that level.
Figure 1:This is -to-population ratios, by age group in the February month of different years [ABS]
Seasonal Effects Still Influencing the Data
January’s its figures were affected by seasonal trends, with many workers delaying their return after the summer break. Economists believe similar factors played a role in February’s decline.
“We wouldn’t be surprised if the sharp fall in the last month is revised to a smaller one over the coming months,” said Marcel Thieliant, head of Asia-Pacific at Capital Economics.
Betashares chief economist David Bassanese also urged caution. “The apparent steep fall in the during February needs to be taken with a grain of salt,” he said. He attributed this to seasonal adjustment challenges since the pandemic.
Participation Rate Drops but Remains Historically High
The participation rate fell 0.4 percentage points to 66.8%, reflecting fewer people in the labour force. However, it remains high by historical standards.
“The participation rate is still relatively high, having reached a historical high last month, and is 0.1 percentage points higher than this time last year,” Mr Jarvis said.
Market Reactions and Economic Impact
Following the job data release, the Australian dollar fell 0.4% to $0.6334. Investors also increased their bets on a potential interest rate cut in May.
Three-year government bonds rose, reflecting expectations of softer economic conditions ahead.
Underemployment and Hours Worked
Underemployment fell to 5.9% in February, a 0.7 percentage point drop from February 2024. The underutilisation rate, which includes both unemployed and underemployed workers, declined to 9.9%.
Monthly hours worked fell 0.4%, matching the decline in employment. However, annual hours worked rose 2.4%, outpacing employment growth of 1.9%.
Trend Data Shows Stability in Labour Market
In trend terms, the unemployment rate remained at 4.0%. the grew by 15,000 people, a 2.4% increase from last year, surpassing the 20-year average of 2.0%.
“This is to-population ratio fell by 0.1 percentage point to 64.2% in February, following six consecutive months of a record high 64.3%,” Mr Jarvis said.
The ABS will release more detailed to data, including regional labour market trends, on 27 March.
