For the third month in succession Australian jobs growth has underwhelmed, increasing by just 300 persons in February according to the ABS.
The figure, below expectations for an increase of 12,000, was lower than even the most pessimistic forecast offered in a survey of 27 economists by Bloomberg.
From February 2015 employment has now increased by 239,400, representing an increase of 2.06%. However, over the past three months total employment has now fallen by 6,600 persons.
Full time employment rose by 15,900, a sharp improvement on the 40,300 decline of January, helping to offset a decline of 15,600 in part time workers.
Despite the jobs miss, the national unemployment rate tumbled to 5.8%, below the 6.0% level expected. A sharp reduction in labour market participation, down to 64.9% from 65.1% in January, was behind the unexpected fall.
As a result in lower labour market participation and flat employment growth, the total number of unemployed fell by 27,300 to 732,600.
Mirroring the decline in the headline unemployment rate, the nation’s underutilisation rate – combining unemployed and underemployed persons – fell 0.1% to 14.2%.
All of the key figures in terms of employment growth, the change in unemployment and labour market participation for February are found in the chart below.
In terms of monetary policy implications, the drop in the unemployment rate to 5.8% – driven by lower labour market participation rather than employment growth – has seen the odds of a further rate cut from the RBA diminish slightly, and put a rocket under the Australian dollar which has hit a fresh yearly high of .7618 following the report release.
However, given breakdown of the February report, along with concerns over the reliability of the ABS seasonally adjusted data, a rate cut has still not been entirely prices out by financial markets.
Cash rate futures put the odds of a 0.25% reduction in the cash rate in May at around a one in three chance.