Australia’s economy added almost 65,000 jobs in February, more than economists expected, indicating hiring was holding up amid the record run of interest rate rises.
The jobless rate fell to 3.5%, seasonally adjusted, compared with January’s reported 3.7%, the Australian Bureau of Statistics said. Economists had predicted employers added a net 50,000 jobs for last month, leaving an unemployment rate at 3.6%.
Labour market numbers can fluctuate and the ABS said last month that January’s rise in the jobless rate masked a larger-than-usual rise in the number of unemployed people who had a job to go to in the future.
The jobs numbers will be examined closely by the Reserve Bank to determine whether it needs to lift its key interest rate again at its next gathering on 4 April. Such a move would mark 11 rate hikes in a row.
Prior to today’s release, though investors were viewing the likelihood of the RBA pausing in its rate hikes as 100%. They were eyeing signs of a slowing domestic economy but also the growing overseas worries about the strength of the financial sector in the wake of several US bank failures.
The Australian dollar nudged higher to about 66.4 US cents. Shares pared their losses for the day, with the ASX200 benchmark stock index recently 1.5% lower.
The economy added 64,600 jobs for the month, with almost 75,000 of them full-time. Just over 10,000 part-time positions were lost. The participation rate rose 0.1 percentage point to 66.6% in February, also back to the level in December 2022.
Bjorn Jarvis, ABS’s head of labour statistics, said: “The February increase in employment follows consecutive falls in December and January. 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.”
Australia's jobless rate sank back to 3.5% in February, and remains not far above its half-century low. (Source: @ABSStats ) pic.twitter.com/pWukh1982a
— @phannam@mastodon.green (@p_hannam) March 16, 2023
“This was particularly evident in the south-east of Australia, with larger than seasonal numbers of people entering into employment across New South Wales, Victoria and the ACT,” he said.
NSW kept its lead as the state with the lowest unemployment rate in the nation at 3.2%, aside from the ACT’s 2.9%.
Other signs of the labour market’s strength include a 3.9% rise in the amount of hours worked in February (seasonally adjusted).
“Following the 2.1% fall in January, when more Australians than usual took annual leave, the hours worked in February bounced back strongly to a level similar to late 2022, and were 5.1% higher than February 2022,” Jarvis said.
How erratic are the seasonally adjusted labour force figures?
— Greg Jericho (@GrogsGamut) March 16, 2023
In February the average hours worked per capita increased by 3.2 hrs - something that had never happened before the pandemic pic.twitter.com/st6TFAqqfp
“In February, there were also no major disruptions that affected people’s ability to work their normal hours, such as the widespread sickness or natural disasters that we have seen over recent years,” he said.
The jobless rate is expected to remain at about 3.5%, or close to current levels, by June, according to the RBA’s quarterly statement released earlier this month. It should then creep up to 4.5% by mid-2025 as the economy slows.
EY’s chief economist, Cherelle Murphy, said the latest figures “gave us a cleaner picture of the labour market and the message is: it’s hot”.
“Despite volatility in financial markets over recent days, the underlying fundamentals of the Australian economy remain solid – even in the face of rate hikes delivered so far,” Murphy said.
“With one unemployed person to a job vacancy, there will be ongoing competition for workers for some time yet.”
Separately, the ABS said Australia’s population grew by 1.6% in the year to 30 September 2022, lifting the tally to about 26.1 million.
Australia's population rate has bounced back to roughly pre-Covid levels, with the population swelling to 26.1m, @ABSStats says. pic.twitter.com/RpgxU260s7
— @phannam@mastodon.green (@p_hannam) March 16, 2023
Beidar Cho, head of ABS Demography, said the population rose 418,500 people over the year, with the expansion pace returning to pre-Covid levels.
The natural increase (the difference between the number of deaths and births) was 114,800 people, a drop of 18.1% from the previous year. Births numbered 302,900, down 2.3%, with deaths rising 10.8% – “mainly due to Covid-19” to 188,000.
“Migrant arrivals have returned to similar levels to those prior to the pandemic but departures remain lower – mainly because there are fewer recently arrived temporary migrants, like international students, who are due to leave,” Cho said.
There were 536,900 overseas migration arrivals and 233,200 departures, implying net migration accounted for almost three-quarters of the population growth.
KPMG urban economist Terry Rawnsley said the population increase was the highest since the year to June 2017. “The lift in migration will mean a range of skills shortages across the economy are filled, but the increase is likely to put more pressure on Australia’s already tight housing supply,” he said.
“New South Wales is losing more people to the rest of Australia at a higher level than pre-Covid, with 8,103 people vacating the state compared to pre-Covid average of 5,500.”
He said net international migration into the state increased to a record of 38,004 for the year.
