Australia's unemployment rate dropped to 5.8% in February, boosting hopes in the economic recovery before JobKeeper rolls back

  • The number of employed Australians has now reached pre-COVID levels, according to the Australian Bureau of Statistics (ABS).
  • In its Thursday labour market report, the ABS states the February unemployment rate was 5.8%, or 0.5% lower than January.
  • The figures suggest Australia’s recovery from the pandemic-induced economic downturn is outpacing expectations — but concerns remain over the winding down of JobKeeper subsidies.
  • Visit Business Insider Australia’s homepage for more stories.

Australia’s labour market is recovering from the COVID-19 crisis with more gusto than expected, with the ABS reporting the unemployment rate dropped to 5.8% in February.

Thursday’s unemployment numbers represent a 0.5% fall from January’s 6.3% figure, and equate to a further 89,000 people attaining full-time employment over the month.

With just north of 13 million Australians now employed, the number of paid workers is some 4,000 above the March 2020 tally — prompting the ABS to declare employment is now above pre-COVID levels.

Youth unemployment dropped to 12.9%, as an influx of Australians aged between 15 and 24 entering the workforce shaved 1.1% off January’s total.

That rally was led by young women, the ABS reports, with an additional 31,000 women under 24 gaining employment.

Hours worked also spiked 6.1% over February, resulting in Australian workers putting in 1,767 million hours while on the clock.

But as economists celebrate a faster-than-expected emergence from the jobs market crash of 2020, other figures suggest not everyone is ready to pop the bubbly.

As employment grows, JobKeeper’s days are numbered

The underemployment rate — representing workers 15 and over who want to work more hours, and are available to do so — ticked upwards by 0.4 points, to 8.5%.

And the ABS’ measure of employed people currently working zero hours, due to the unavailability of work or being stood down, continues its upwards trajectory.

In February, 126,000 workers stood in that cohort, up from 102,600 in January, and 64,600 in December.

While the number of employed Australians on zero hours is well down from its April 2020 high, the impending demise of the JobKeeper wage subsidy — which has supported vulnerable workers through industry shutdowns and border closures — threatens to expose that group to renewed hardship.

“The next major obstacle on the road to recovery is the end of the JobKeeper wage subsidy at the end of March,” said Callam Pickering, APAC economist at online jobs portal Indeed.

“That will coincide with Easter, which could create an uncertain period for job postings and labour market conditions more broadly.”

Earlier this month, Commonwealth Bank economists estimated some 110,000 jobs could be at risk when the JobKeeper subsidy winds down.

The Federal Government has long pointed to decreasing unemployment and positive job ad growth as signs that taxpayer support should be cut back.

Today’s topline ABS findings are likely to strengthen that viewpoint, but April’s labour force figures, to be released in May, could yet dampen optimism in Australia’s recovery.

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