Australian employment extend gains in February; wage pressures to remain muted on labour market spare capacity

Australia’s Employment rose again in February, extending the record string of jobs gains. The rise in both the unemployment and underemployment rates was, however, quite disappointing. The strength in the jobs market is clearly drawing in more workers, but ongoing labor market spare capacity suggests wage pressures are likely to remain quite muted.

Employment rose for the seventeenth straight month, with a gain of 17.5k jobs in February, following a downwardly revised rise of 12.5k in January. While this is a fresh record string of gains, the rise in both unemployment and underemployment took the gloss off the report.

Full-time jobs rebounded a sharp 65k after the 53k drop in January. The numbers look to be capturing some residual seasonality, with full-time jobs falling in the past three Januarys. Taking the two months together, full-time jobs are up just 12k. Hours worked rose a strong 1.2 percent m/m, although over the past three months they are down 0.5 percent.

Somewhat surprisingly, the unemployment rate ticked back up to 5.6 percent, alongside a rise in the participation rate back up to 65.7 percent. The female participation rate edged back to its record high of 60.5 percent, while male participation remained unchanged at a still-high 70.9 percent. 

"Leading indicators continue to suggest that the labour market will tighten further. Record high business conditions and ongoing growth in job ads suggest that solid jobs growth should continue and the unemployment rate should decline further in coming months," ANZ Research commented in its latest report.

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