Unemployment rate jumps to 5.9 per cent in February

The jobless rate has unexpectedly jumped to 5.9 per cent, its highest level in just over a year, as the economy shed 6400 jobs in February.

Economists had tipped Thursday's labour force figures to show the unemployment rate remaining at 5.7 per cent, and an employment rise of just under 20,000.

Up Next

Commodity shippers eye Korea tensions

Video duration

More BusinessDay Videos

Unemployment rate jumped in February

Australia's unemployment rate rose to 5.9 per cent in February, from 5.7 per cent in January. (Courtesy ABC News 24)

There was some positive news, with a 27,100 rise in full-time employment after a steep drop the previous month, although this was wiped out by a 33,500 tumble in part-time workers.

The shift to part-time work in the past year saw the underemployment rate - people looking for extra work - returning to a record high 8.7 per cent or 1.1 million workers.

The Australian dollar slipped about two-tenths of a cent to below US77¢ following the jobs disappointment. It was fetching US76.93¢ close to noon, after hitting a three-week high of US77.19¢ earlier in the session.

Meanwhile, another report forecast an improved employment outlook.


Detail in the Westpac-Australian Chamber of Commerce and Industry industrial trends survey showed fundamentals are pointing to employment growth of 2 per cent or slightly higher in 2017.

"If that is achieved, it would be a significant turnaround from last year, when jobs growth was a little bit less than 1 per cent," Westpac senior economist Andrew Hanlan told reporters in Canberra.

CommSec chief economist Craig James said the ABS jobs data was always volatile and the latest release didn't line up with other evidence.

"There have been healthy business surveys in recent months, with the NAB business conditions index hitting nine-year highs in January," he wrote.

"Mining prices have lifted, the agricultural sector is buoyant, tourist arrivals are at record highs and more homes are being built than ever before. Certainly, leading indicators like job ads are pointing higher rather than lower. And low real unit labour costs give employers plenty of reasons to be taking on staff."

UBS economist George Tharenou said overall labour market trends in recent months showed ongoing modest jobs growth. But the jump in the unemployment rate, combined with weak hours, saw the broader underutilisation rate surge to just below a two-decade high, indicating significant labour market slack.

"That said, lead indicators of employment still suggest better jobs growth over coming months. Nonetheless, for now, the labour market data strongly argues against growing calls for the RBA to hike [the cash rate]," Mr Tharenou wrote in a note to clients.

Australia's labour market is showing mixed signals following lacklustre hiring last year, when full-time jobs virtually stagnated as gains were primarily part-time; unemployment only held below 6 per cent due to discouraged job-seekers giving up the hunt.

The Reserve Bank of Australia cites forward indicators suggesting the labour market will strengthen and growth is forecast to pick up to an annual 3 per cent later this year.

Australia's economy is divided: on the east coast property prices are booming, spurring housing construction and attracting people from other states, while local governments are investing in infrastructure.

In the west and north where a mining investment boom is unwinding, property prices are falling, businesses are going bust and people are leaving. Internal migration is the main factor containing unemployment in Western Australia and Queensland and preventing it falling too far in Victoria and NSW.

More to come

AAP with Bloomberg