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Australia’s February labour market report disappointed, with a fall of 6.4k jobs and a rise in the unemployment rate to 5.9 percent. The detail was slightly more positive than the headline with full-time jobs rebounding after the previous month’s sharp fall.
The lift in the unemployment rate was particularly disappointing. It had been tracking broadly around 5-3/3 percent for nearly a year, but is now at its highest level since January 2016. With underemployment still stubbornly high, this suggests that there is still significant spare capacity in the labour market which is likely to continue to weigh on wage growth for some time.
Further, in terms of the states, unemployment rates are trending higher in the three east-coast mainland states, while Western Australia’s unemployment rate looks to be stabilizing at around 6-1/2 percent. Tasmania is a standout performer, with the unemployment rate down below 6 percent after briefly edging above 7 percent in mid-2016.
"The soft tone to the February report provides further confirmation for our view that the RBA is likely to be on hold for an extended period," ANZ Research commented in its latest research report.
