The demise of the JobKeeper wage subsidy at the end of this month will be a test for what Scott Morrison has described as a "truly remarkable" recovery in Australia's jobs market.
New figures showed employment jumped by a further 88,700 in February - nearly three times larger than economists had expected - which pushed the jobless rate down to 5.8 per cent.
The Australian Bureau of Statistics said February's rise had lifted the number of people in employment to above 13 million, to be 4000 people higher than March 2020 when the crisis began.
"In less than 12 months from when the recession began, caused by the COVID-19 pandemic, there are now more jobs in the Australian economy than there were before the pandemic," the prime minister told reporters in Canberra.
"That is something that is truly remarkable."
The employment rise featured an 89,100 increase in full-time workers, which was only partly offset by a small fall in part-time positions.
"It's capping off the summer of love. We have had months of good news on the Australian economy that keeps outperforming expectations," Deloitte Access Economics' Chris Richardson told AAP.
The jobless rate decline follows a downwardly revised 6.3 per cent in January, but it is still 0.6 percentage points above its March 2020 level, leaving about 89,000 more people unemployed.
Treasurer Josh Frydenberg had pledged that the government will begin budget repair once the unemployment rate is comfortably below six per cent.
However, he says "5.8 per cent is not comfortably below six per cent".
"The other point I would make is that the unemployment rate in February of last year was 5.1 per cent," Mr Frydenberg told reporters.
While welcoming the latest jobs figures, deputy Labor leader Richard Marles said the country is still no closer to knowing the plan for those businesses and workers who rely on JobKeeper.
"Business want answers. Workers need certainty," he said.
Mr Richardson said some businesses and their workers will struggle, but he believes it has become much less dangerous for the economy than he previously thought.
"It's a challenge, but we are hitting it with momentum," he said.
A new analysis of 300 companies on the ASX that received JobKeeper subsidies in the second half of 2020 found one-fifth reported an increase in their underlying earnings from pre-pandemic levels.
Labor's Andrew Leigh said this was a "shocking waste".
"JobKeeper was supposed to support firms that were suffering. JobKeeper was never meant to go to firms whose profits were rising," he said.
But Mr Morrison was unmoved, saying he would rather have profitable companies.
"A profitable company is putting people in work," he said.
A new report also warns the good fortunes retailers enjoyed coming out of last year's recession may not last as government stimulus measures wind back.
Retail spending was one of the bright spots of the economy in the second half of 2020, which could spill over into the early stages of this year.
But Deloitte Access Economics says a return to more normal spending could mean 2020's windfalls are temporary.
Retail spending ended 2020 on a strong note, with volumes surging 6.4 per cent over the year to the December quarter.
But Deloitte expects spending to slow down during the second half of this year, to be down 0.4 per cent for 2021.
Australian Associated Press