Australia employment posts surprise fall in February, jobless rate steady
Swaps still see a scant chance – about 10 per cent – of a rate cut in April, but a move in May is now priced at 78 per cent, up from 70 per cent previously
[SYDNEY] Australian employment posted a surprise fall in February, ending a strong run of impressive gains, as the red-hot labour market loosened a little, although the jobless rate stayed steady.
The Australian dollar slipped 0.3 per cent to US$0.6340 after the data, while three-year government bonds extended an earlier rally to be up seven ticks at 96.29.
Swaps still see a scant chance – about 10 per cent – of a rate cut in April, but a move in May is now priced at 78 per cent, up from 70 per cent previously.
Figures from the Australian Bureau of Statistics (ABS) on Thursday (Mar 20) showed net employment fell 52,800 in February from January, when it rose by a downwardly revised 30,500. That was well under market forecasts for a 30,000 rise.
Annual jobs growth pulled back sharply to just 1.9 per cent from 3.5 per cent the previous month, although that is still in line with long-running averages. The participation rate, which hit a record high of 67.2 per cent in January, slumped to 66.8 per cent.
The jobless rate, however, stayed at 4.1 per cent, matching market expectations.
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The ABS noted fewer older workers returned to work in February, contrary to expectations that more people would return after the New Year holidays.
“(It) contributed to the fall in employment, with lower levels of employment in the older age groups in February 2025 compared with 2024,” said Bjorn Jarvis, ABS head of labour statistics.
The Reserve Bank of Australia (RBA) cut interest rates last month for the first time in four years, but cautioned that further easing could not be guaranteed given the surprisingly strong labour market could risk stoking inflation.
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The central bank has forecast core inflation, which slowed to 3.2 per cent in the fourth quarter, to bottom out at 2.7 per cent later this year, above the midpoint of its target range of 2 to 3 per cent.
The main inflationary effect of strong employment is typically through rising wages, but wage growth moderated to a two-year low in the last quarter.
“RBA has been obsessing over the danger of wages surging from a strong job market, now it seems they should not have been so worried,” said Sean Callow, senior FX analyst at ITC Markets. REUTERS
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