Australia’s jobless rate fell to 3.7% in February, with the addition of 116,000 positions in the labour market, a figure that is three times the level initially anticipated. The unemployment rate drop from an adjusted 4.1% in January was revealed by the Australian Bureau of Statistics. The majority of the new jobs are full-time roles. The unexpected employment surge lessened the jobless rate to what it had been six months prior.

Economists were taken aback with the labour market performance, with Harry Murphy Cruise from Moody’s Analytics using the term all topsy-turvy to describe the status. The participation rate was recorded at 66.7%. Also, hours worked went up by 2.8% compared to January.

Australia’s economy witnessed a slump in the last quarter of 2023, with a slim growth of just 0.2%. This was amidst 13 interest rate increases by the Reserve Bank to control inflation. As a result, the labour market began to weaken starting from September. The Reserve Bank had predicted the unemployment rate to slowly increase to 4.2% by June and 4.3% by the end of the year.

RBA governor Michele Bullock did hint at potential cuts to the key interest rate if rapid unemployment occurs, as long as inflation keeps on a slow downward trajectory towards a target range of 2%-3%.

The positive job figures were closely watched by investors, with the result leading to a rise in the dollar and a trimming of stocks. The favourable jobs performance has been praised by Australian treasurer, Jim Chalmers, who considers the labour market as one of Australia’s greatest strengths.

While the labour market uptick has been generally across the country, South Australia and New South Wales have seen the most significant drops in their unemployment rates. On the other hand, Victoria and Tasmania saw steady rates, and the Northern Territory recorded a slight increase.

The jobs boom coincides with a surge in net migration to Australia in the same year, with almost 550,000 newcomers recorded into the country.

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