According to the Australian Bureau of Statistics (ABS), Australia’s unemployment rate remained steady at 4.1% in February despite a significant drop in employment. The economy shed 52,800 jobs, defying predictions of a 30,000-job increase and reflecting a decline in labour force participation.
The participation rate fell from its record high of 67.3% in January to 66.8% in February. The ABS attributed part of the employment decline to fewer older workers returning to the workforce, with employment in older age groups lagging behind levels seen in February 2024.
“This follows higher levels of employment in these age groups in recent years, particularly in 2024, alongside growth in the employment-to-population ratio,” ABS head of labour statistics Bjorn Jarvis said. However, he noted that employment for individuals aged 15 to 54 continued to grow over the past year.
Seasonal factors influenced January’s employment figures, as many Australians delayed their return to work or job searches until after the summer break. Economists believe these seasonal effects carried over into February.
Capital Economics’ head of Asia-Pacific, Marcel Thieliant, predicted that officials might revise the sharp fall in employment downward in the coming months. Betashares chief economist David Bassanese also cautioned against overinterpreting February’s numbers, citing ongoing “turn-of-the-year seasonal adjustment problems” that have persisted since the pandemic.
Australia’s Unemployment Rate Holds at 4.1% as Job Losses Mount
The ABS noted an increase in retirements across the country and plans to release more detailed data on this trend next week.
The Reserve Bank of Australia (RBA) is set to make its next interest rate decision on April 1. While the tight labour market remains a key factor in the bank’s considerations, economists believe this latest data will not significantly alter its course.
Thieliant downplayed the impact of the employment drop, stating that the stable unemployment rate should prevent the RBA from making drastic changes. “Given that economic activity is now rebounding, we doubt that the labour market will loosen much further,” he said.
Callam Pickering, an economist at the jobs site Indeed, described the job market as “healthy” despite the largest employment decline since December 2023. “That earlier decline didn’t derail Australia’s jobs boom, and I suspect the same will be true for February,” he said.
ANZ Research maintained its forecast for an interest rate cut in August, while Pickering projected a possible cut in May or July.
Labour market fundamentals remain strong, with job advertisements still at elevated levels and the underemployment rate falling slightly to 5.9%, 2.8% lower than in March 2020.
Despite the employment drop, economists argue that Australia’s job market remains resilient. The RBA will continue monitoring economic trends, including labour force participation and underemployment, as it assesses future monetary policy moves. Meanwhile, analysts expect further clarity on workforce trends when the ABS releases additional data in the coming weeks.
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