Labour Market Remains Tight, RBA Uncertain Given Bank Concerns

Employment bounced back 64.6k after declining the previous two months and the unemployment rate returned to 3.5%, close to its October 2022 low. The labour market remains very tight with little sign of easing pressures, thus this data along with the solid NAB business survey point to a further 25bp hike in April. However, market turmoil and overseas banking issues are muddying the waters for the next RBA meeting.

• There were 64.6k new jobs in February more than expected and more than reversing the cumulative 27.5k drop in Dec/Jan. There was also a return to the trend of rising full-time employment (+74.9k) and falling part-time (-10.3k), reflecting ongoing labour shortages. The ABS noted that the majority of the people waiting to start a new job in January returned to work in February and the numbers waiting to start a new job are back to normal.
• The number of unemployed fell 16.5k helping to bring the unemployment rate down along with strong jobs. However, the number of unemployed is 4.1% higher than the October trough, which is not surprising given the increase in labour supply through immigration.
• Underemployment and underutilisation rates all eased back to their recent lows; another indicator of a tight labour market. The former fell 0.4pp to 5.8% and the latter -0.4pp to 9.4%, the lowest since 1982 apart from November 2022.
• Hours worked also rebounded after three consecutive falls. They rose 3.9% m/m and 5.1% y/y in February with full-time up 4.4% m/m and part-time +1.3% m/m. The ABS commented that there were “almost no major disruptions” to hours worked, as the economy normalises.
• The participation rate rose 0.1pp to 66.6% but remains below November’s peak of 66.8%.

Source: MNI - Market News/ABS

Australia underemployment rate vs underutilisation rate %

Source: MNI - Market News/ABS