Jobless rate falls to 3.7pc

A boom in jobs has pushed down Australia’s unemployment rate and prompted economists to trim their interest rate outlook though some have cast doubt on the data.

Australia's unemployment rate fell to 3.7 per cent in February from 4.1 per cent in January, the Bureau of Statistics has estimated.

It also estimated a 116,000 rise in employment.

The large gain in February came after a fall in December (down 62,000) and a modest lift in January (up 15,000).

CommSec chief economist Craig James was among the sceptics.

“It is hard to believe that over 116,000 jobs were created in February or that the jobless rate fell 0.4 percentage points,” he said in a research note.

“In fact, the job gains last month were the most since Aussies emerged from Covid-19 lockdowns in November 2021!”

Adding to his scepticism, Mr James said the ABS data showed South Australia’s unemployment rate plummeting to a record low of just 3.2 per cent.

Looking past the seasonal volatility in recent months, Mr James suggested the ABS’s trend data provided the best guide.

“The trend data shows the jobless rate stable for the past six months,” he said.

“And that is probably closer to the truth.”

HSBC’s chief economist Paul Bloxham concluded the labour market was weakening slightly.

“Looking through the bumps, employment has averaged growth of 23,000 jobs a month over the past three months,” he said.

“The unemployment rate has now lifted from its low of 3.4 per cent in October 2022 to its current level at 3.7 per cent.

“The jobs market has been loosening, but only very gradually.

“This has been our general assessment, and today's figures help to support this view.”

Mr Bloxham said the Reserve Bank will see these figures as supporting its decision earlier this week to hold the cash rate steady.

“Our central case is that the cash rate will be held steady at 4.35 per cent through 2024, with cuts not arriving until early 2025,” he said.

Mr James concluded that “interest rates are going nowhere in a hurry”.

“Those analysts that are tipping rate cuts in 2024 may have had their confidence tested,” he added.

In reaction to the job data, traders trimmed the expected monetary policy easing for 2024 calendar year to 37 basis points from 44 basis points before the jobs update.

The Aussie dollar rose 0.3 per cent from US65.9 cents to US66.2 cents after the data release.

The Reserve Bank has forecast an unemployment rate of 4.2 per cent by the middle of the year and 4.3 per cent by the end of 2024.

WA treasurer Rita Saffioti hailed the ABS jobs data as another signal of the local economy’s strength.

“The labour force data released today is another extraordinary result for WA and highlights the continued strength of our economy despite global and national headwinds,” she said.

Ms Saffioti noted that WA’s monthly employment grew by a massive 1.7 per cent or 26,319 people in February.

She said the outcome was the best result of the states and the strongest growth in almost three years.

WA’s unemployment rate fell to 3.6 per cent, just below the national figure.