In February, Australia saw its labor market stumble significantly, with employment plummeting by 52,800. This downturn starkly contrasts with the forecasted gain of 30,000 jobs and reverses January’s upwardly revised growth of 44,000 positions.
Interestingly, despite this decline, the unemployment rate held steady at 4.1%, which was in line with predictions. Here’s the lowdown from the latest report:
- Full-time positions decreased by 35,700.
- Part-time jobs saw a reduction of 17,000.
- The participation rate slipped from the previous month’s record of 67.2% to 66.8%.
- Total hours worked fell by 0.4%.
- Annual job growth slowed to 1.9% from a more robust 3.5%.
The type of jobs lost paints a revealing picture. In January, the economy added over 54,000 full-time jobs, shedding part-time roles, suggesting a robust core employment. But February flipped that script entirely, hitting full-time jobs the hardest. With the drop in hours worked, there’s more evidence indicating the labor market’s cooling trend.
For those interested in a deeper dive, you can find more details in Australia’s Labour Force Survey for February 2025.
This shift could mean that the previously resilient labor market is beginning to feel the effects of higher interest rates, which seem to be curbing economic demand as intended.
Market Reaction
Let’s take a look at how the markets responded:
- Australian Dollar vs. Major Currencies: 5-min chart
A sudden and unexpected drop in employment figures could give the Reserve Bank of Australia (RBA) some assurance for possible policy easing in the months ahead, especially given that the unemployment rate remains relatively low by historical measures.
Initially, the Australian dollar, which had been stable before the jobs report, sharply decreased following the employment miss. Traders seem to see an increased likelihood of RBA rate cuts as a result.
However, a lift in risk sentiment due to gains in the previous US session helped the Australian dollar regain some ground, although it remains generally weak except when compared to the New Zealand dollar.
