Australia’s unemployment rate remained unchanged at 4.1% in February, although the country witnessed a significant drop in employment figures, with 53,000 jobs lost. According to the Australian Bureau of Statistics (ABS), the decrease came as fewer Australians were either working or seeking employment.
This shift in labour force participation also contributed to a decline in the participation rate, falling from 67.3% to 66.8% during the same period.
Employment Decline and Seasonal Effects
February’s drop in employment marks a notable shift from the strong growth observed in previous months. The 53,000 jobs lost were considerably higher than expected, with economists forecasting a modest increase in employment.
A key factor attributed to this decrease is the impact of seasonal factors, as many Australians return to work following the summer break. The Australian labour market has seen such seasonal adjustments in recent years, which may have influenced the February data.
Bjorn Jarvis, the ABS head of labour statistics, explained that the fall in employment was partially due to a decrease in older workers re-entering the workforce, noting that employment in older age groups was lower than the same time last year.
In contrast, younger Australians, particularly those aged between 15 and 54, continued to show strong employment growth, according to the ABS. Economists have suggested that the sharp decline in February employment figures could be subject to revision as further seasonal adjustments are made.
Marcel Thieliant, head of Asia-Pacific at Capital Economics, said it would not be surprising if the figure is revised to reflect a smaller decline in employment over the next few months. Despite the drop, the overall employment trend remains relatively healthy.
Impact on Reserve Bank of Australia’s Policy
Despite the unexpected employment drop, the Reserve Bank of Australia (RBA) is unlikely to make any sudden changes to its monetary policy. The RBA’s decision-making will likely be based on the broader trends in economic activity, which continue to show signs of rebounding.
The RBA’s forecasts for the unemployment rate indicate a steady 4.2% by mid-year, with limited movement in the job market in the coming years. Given the current stability in the overall labour market and the tightness observed in certain sectors, economists believe that any changes to interest rates will likely be gradual.
David Bassanese, chief economist at Betashares, remarked that the February data is unlikely to spur any dramatic actions from the RBA, as the labour market remains tight despite the recent setback in employment figures.
