Latest jobs data gives 'mixed signals' about labour market

The Australian Bureau of Statistics (ABS) has released the latest seasonally adjusted employment figures, which show that the unemployment rate has risen to 4.3 per cent, having dropped to 4.1 per cent earlier this year, and holding steady at that level in February.

The news follows the Reserve Bank’s decision, earlier this week, to increase the cash rate by 25 basis points for the second time in a row, taking the rate to 4.1 per cent.

Speaking about the data, ABS head of labour statistics Sean Crick said: “The number of unemployed people grew by 35,000, contributing to the 0.2 percentage point increase of the unemployment rate in February.”

“This month, we saw fewer people who were unemployed and waiting to start a job in January move into employment in February, compared to recent Februarys,” he said.

“We also saw more people remaining unemployed this month compared to recent Februarys.”

Employed people grew by 49,000, the ABS reported, while part-time employment rose by 79,000 people and full-time employment fell by 30,000 people.

“This month, we saw more people move into part-time employment, particularly those aged 65 and over,” Crick said.

“Additionally, this month we saw that fewer people are leaving jobs to retire compared to a year ago.”

Elsewhere, hours worked fell 0.2 per cent in the past month, with more people working part-time hours instead of full-time hours.

The growth in both employment and unemployment has resulted in a 0.2 percentage point increase in the participation rate, which was 66.9 per cent in February, the ABS noted.

The data also showed that the trend unemployment rate dropped to 4.2 per cent.

“The trend unemployment rate fell marginally from a revised 4.3 per cent in January to 4.2 per cent in February,” Crick said.

“Trend employment grew by 0.2 per cent while hours worked grew by 0.3 per cent in February. Annually, hours worked also grew faster than employment.”

AMP economist My Bui said while the labour market remains strong, the February jobs data provided “mixed signals”.

“The statistics overall still indicate that the labour market remains in good shape. Firstly, the increase in part-time positions was driven by a larger number of 65+ year olds than usual who moved into part-time employment. In addition, the pickup in unemployment rate this month was driven by a higher participation rate of 66.9 per cent, as fewer people retire than usual,” Bui said.

“Overall, the employment to population ratio increased to a historically high level of 64.0.”

BetaShares chief economist David Bassanese said the noticeable growth in part-time employment and labour force participation by those aged 65 years and over could reflect a structural trend toward older workers wanting to remain in employment for longer, or a less pleasing reality that cost-of-living pressures have forced them to delay retirement.

Bassanese said the mixed market result should not shift Reserve Bank expectations too much either way.

“Signs of a positive labour supply response, especially among older workers, along with the lift in the unemployment rate, are likely to be welcomed by the RBA, as they suggest the labour market may now be a little less tight than previously thought,” he said.

“That said, the RBA will also note that the labour market remains quite able to absorb the growing workforce, as evidenced by the overall 48k gain in employment.”

Bassanese said he is still expecting the RBA to raise rates in May, following another uncomfortably high March quarter CPI report in late April.