February's unemployment rate falls to 3.7%, much lower than market expectations. The increase in jobs challenges the argument for rate cuts and indicates a strong economy.
So much for market expectations that February’s unemployment numbers would be about 4 per cent rather than falling to a surprisingly low 3.7 per cent. Yes, monthly figures do bounce around – as demonstrated by the lift to 4.1 per cent in January from 3.9 per cent. But the fact thatby close to three times the consensus figure of 40,000 jobs came as a shock – presumably to the Reserve Bank as much as to market economists.
The unemployment data re-enforces why RBA governor Michele Bullock sounds so cautious about the prospect of rate cuts.This seems to knock over any argument that interest rate cuts will start sooner rather than later as the economy slows due to the accumulated impact of the central bank’s 13 rate rises over two years. Nor is February’s low unemployment rate because more people had dropped out of the workforce, with both the participation rate and overall hours worked increasing as well.About two-thirds of the 116,500 increase in employment during the month was for full-time jobs. Instead of weakening, a buoyant jobs market is back to where it was about six months ago. The government will enthusiastically welcome the increase in jobs and celebrate what it says about the strength of the economy. Treasurer Jim Chalmers claims this is delivering the “trifecta of moderating inflation, growing real wages, and lower unemployment under Labor
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