Unemployment rate falls back to 3.5 per cent

Unemployment rate falls again

The jobless rate fell again in February, putting more pressure on the Reserve Bank over interest rate rises.

Around 64,600 jobs were added to the economy during February, official Australian Bureau of Statistics labour force data released on Thursday showed.

The overall rate fell to 3.5 per cent, after rising to 3.7 per cent in January.

“With employment increasing by around 65,000 people, and the number of unemployed decreasing by 17,000 people, the unemployment rate fell to 3.5 per cent,” ABS head of labour statistics Bjorn Jarvis said.

“This was back to the level we saw in December.”

The participation rate rose 0.1 percentage points to 66.6 per cent, also back to its December level.

“The February increase in employment follows consecutive falls in December and January,” Mr Jarvis said.

“In January, this reflected a larger than usual number of people waiting to start a new job, the majority of whom returned to or commenced their jobs in February.”

But some forward-looking indicators, such as job vacancies and advertisement data, are pointing to a slowdown in employment.

Job marketplace SEEK reported a 1.6 per cent fall in job ads in February to be down 12.2 per cent year-on-year.

St George chief economist Besa Deda said the rapid recovery in net overseas migration was improving the supply of labour.

Ms Deda said the jobs data would be central to the RBA’s April cash rate decision.

She also said signs of financial instability in the US and Europe would put more pressure on central banks, including the Reserve, to take the accelerator off rate hikes.

Capital Economics analyst Marcel Thieliant said the “red hot” jobs data should all but guarantee another lift in the official cash rate in April.

“February’s strong labour force figures will prompt the Reserve Bank of Australia to press ahead with another 25bp [basis point] hike at its April meeting despite mounting signs of strain in the global banking system,” he wrote.

“There are still three weeks until the next RBA meeting and it’s possible that tensions in financial markets caused by ailing banks in the US and Europe spiral out of control.

“As things stand though, there are no signs of major stress in Australia’s financial system.

“The labour market figures released today underline that the economy is still operating well above sustainable levels and we expect the bank to press ahead with further tightening next month.”

– with AAP

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