Australia’s unemployment rate rose unexpectedly to 4.3 percent in February, defying forecasts that it would hold steady at 4.1 percent.
The Australian Bureau of Statistics revealed that the economy added 48,900 jobs, surpassing expectations of 20,000 new positions. Yet, the number of unemployed individuals climbed by 35,000, driving the 0.2 percentage point increase.
Key Factors Behind the Shift
Sean Crick, head of labour statistics at the ABS, explained that fewer people unemployed and awaiting jobs from January transitioned into employment this February compared to prior years. “We also saw more people remaining unemployed this month compared to recent Februarys,” he added.
Fewer workers retired compared to a year ago, boosting the participation rate by 0.2 percentage points to 66.9 percent. Part-time employment jumped by 79,000, while full-time roles dropped by 30,000. “This month we saw more people move into part-time employment, particularly those aged 65 and over,” Crick noted.
Labour Market Strength Persists
The unemployment increase may reduce Reserve Bank worries over tight job market capacity stoking inflation. Strong job gains and elevated participation underscore a resilient labour market.
Economists Revise Forecasts
Harry McAuley, economist at Oxford Economics Australia, indicated the labour market shows signs of slowing. “Based on Tuesday’s rate decision and the ongoing conflict in the Middle East, we have bumped up our unemployment forecasts,” he stated.
Unemployment now projects to climb faster through 2026, peaking just below 4.6 percent in early 2027. “The key risk to the outlook is the severity and length of disruptions to key oil and gas routes in the Middle East—a sustained period of high energy costs may require a stronger policy response from the RBA, which would resonate through the employment figures,” McAuley warned.
The Reserve Bank lifted the cash rate by 25 basis points to 4.10 percent on Tuesday.
