The unemployment rate in February fell to another eight-year low of 4.9% yesterday, seasonally adjusted (and an unchanged 5% on the more accurate trend basis) according to the latest Labour Force report from the Australian Bureau of Statistics.
But there were hints that the most watched indicator of economic health – the performance of the labour market – might be starting to come under pressure with unexpectedly sharp rises in the unemployment rates in NSW and Victoria.
Both states are the strongest economies in the nation as big spending plans on infrastructure offset the slide in housing investment.
But they went off the boil in February with surprising large rises. In NSW, where the jobless rate jumped to 4.3% from 3.9 from the ultra (US low) low reading in January while Victoria saw a slightly smaller rise to 4.8% from 4.6%.
But other states saw sharp falls in their jobless rates – in fact very sharp falls.
The ABS said “Decreases were observed in Western Australia (down 0.9 pts to 5.9%), Queensland (down 0.6 pts to 5.4%), South Australia (down 0.6 pts to 5.7%) and Tasmania (down 0.5 pts to 6.5%).
On a trend basis, the picture was a touch stronger – the jobless rate remained steady at 5.0% (the January reading of 5.1% was revised down to 5.0% in the latest release).
Those hints will have the Reserve Bank on edge as it moves slowly towards a possible rate cut. It now has the health of the labour force as its prime indicator to watch from now on as it wonders if it should cut rates or hold off.
And more importantly, the 290,700 new jobs created in the year to February was a growth rate of 2.3% which was down from 2.4% (295,000 new jobs) in January but still well above the 2.0% average for the past 20 years. That performance will reassure the RBA.
But the fall in the seasonally adjusted jobless rate was due to a drop in the number of people looking for work with the participation rate easing to 65.6% from 65.7% (it was unchanged at 65.6% on a trend basis which is probably a more accurate reading).
The total number of Australians in work in February rose by just 4,600. Markets had been expecting a rise of between 5,000 and 15,000 increase, while a couple of forecasts saw a fall of around 5,000.
The number of people holding a full-time job actually fell, down by 7,300 seasonally adjusted.
On a trend basis, the number of new jobs last month increased by 20,600. Full-time employment by 12,300 and part-time employment increased by 8,200.
The ABS said that the trend monthly hours worked increased by 0.1% in February 2019 and by 1.9%, which was slightly above the 20-year average year-on-year growth of 1.7%.
The trend monthly underemployment rate decreased by less than 0.1 percentage points to 8.1% in February and by 0.4 percentage points over the year.
