Australia’s unemployment rate falls to 4% – the lowest since 2008 | Australian economy
Australia’s jobless rate sank to a new 13-year low last month with a big rise in full-time positions, as the economy shrugged off more of the Omicron Covid disruptions.
The country’s unemployment rate fell to a seasonally adjusted 4.0% in February, compared with 4.2% in January. That’s the lowest rate since August 2008, the Australian Bureau of Statistics (ABS) said.
The jobless rate for women fell to 3.8%, or the lowest since May 1974. For men, the unemployment rate was 4.2%, or a shade above the 4.1% recorded last December.
The economy added a net 77,400 jobs last month, with full-time work rising by more than 4,000 a day, or 121,9oo for February. Part-time jobs shrank by 44,500.
More people were looking for work too, with the participation rate increasing by 0.2 percentage points to 66.4% – the highest on record. Hours worked increased by 148.7m, although remained below the pre-Delta period high of May 2021.
Employment increased for the fourth month in a row, by about 77,000 people (0.6%) in February, and was about 202,000 people (1.5%) higher than the pre-Delta high of June 2021. The market was expecting 37,000 extra jobs in February.
Seasonally adjusted hours worked jumped 8.9% last month, making up for an 8.6% drop in January when the Omicron variant caused many people to report in sick or as a close contact.
“While hours worked rebounded in February, they were still around 0.5% below December, and also still slightly below (0.2%) the pre-Delta period high of May 2021, reflecting a second month of impacts associated with the Omicron variant,” Bjorn Jarvis, the head of labour statistics at the ABS, said.
“The number of employed people working no hours over the entire week due to illness or sick leave was around 80% higher than what we would usually see in February, having been around triple the usual level in January”, Jarvis said.
The Reserve Bank of Australia has predicted the jobless rate will fall below 4% this year to the lowest since the mid-1970s. The current ABS month survey dates from 1978, and February’s 4.0% rate has only been matched twice previously, in February and August 2008.
“Lower unemployment rates occurred in the series before November 1974, when the survey was quarterly,” the ABS said.
Excluding the rounding, February’s jobless rate was 4.042%, narrowly above the 4.016% in August 2008. Technically, the series has already had a sub-4% unemployment rate in the past 14 years, with 3.981% recorded in February 2008.
While the participation rate was at a record high, there remains a big gap between male and female rates. For men, the ratio of those in work or looking for work rose 0.2 percentage points last month to 70.7%, while the ratio for women increased by a similar amount to 62.4%, the ABS said.
Among the states, South Australia – which goes to the polls for state elections on Saturday – had the highest jobless rate of 5.0%, and the ACT had the lowest at 3.0%. New South Wales’ 3.7% was the lowest among the major states, ahead of Victoria, Queensland and Western Australia, which were all between 4.1% to 4.3%.
“By state, hours worked rebounded most in the states that were more heavily affected by the peak of the Omicron wave in January,” Gareth Aird, CBA’s head of Australian economics, said. In NSW, hours worked jumped 14.3% and in Victoria by 12.7%.
The head of macroeconomic forecasting for BIS Oxford Economics, Sean Langcake, said the labour market was “going from strength to strength” with more expected in March, a shift that would put pressure on employers to lift wages.
“Conditions are primed for wage growth to increase through the year, with spare capacity at historically low levels,” Langcake said, adding that he still expects the RBA to hold off lifting the official cash interest rate until the December quarter.
Ahead of the jobs figures, investors were predicting the first RBA rate rise would probably come in July.
“Our central scenario remains that the [March quarter] consumer price index will print a lot stronger than the RBA’s implied profile, and we anticipate that the RBA will move to an explicit hiking bias at the May Board meeting,” the CBA’s Aird said. “We expect the RBA to commence normalising the cash rate in June.”
The chief executive of Australian Chamber of Commerce and Industry, Andrew McKellar, welcomed the increase in the participation rate and the fall in the underemployment rate to 6.6% as “particularly good news”.
“Further growth in workforce participation is critical to resolving chronic labour shortages we are seeing across the economy,” McKellar said.
“Australian businesses are looking toward the federal budget for measures that will continue to increase workforce participation, grow investment in skills and VET, and boost skilled migration to plug widespread workforce shortages.”
The prime minister, Scott Morrison, weighed in on the labour figures.
“The unemployment rate at 4% is the lowest rate that we’ve seen in almost 50 years. I was five years old when we last had an unemployment rate this low – and I think that says something.”
As noted above, though, the rate is at its lowest in less than 14 years – during the first Kevin Rudd stint as PM – if the rounding is excluded.
The employment minister Stuart Robert chimed in too, claiming the prime minister was “quite correct”.
“The last time it was 4% was August 2008, February  and . That’s why I chose my words carefully to say it is the equal lowest rate – so the prime minister is absolutely correct,” Robert told reporters in Canberra.
Reporters noted Morrison did not say the “equal” lowest, and he said it was the “last” time the unemployment had been that low.