The ABS just released the February employment report, and it’s a big beat on expectations.
Here are three things you need to think about.
1) The surge in employment of 47,300 with 80,500 in full-time is simply huge for an economy the size of Australia. It flies in the face of indicators such as the NAB Business survey employment index and the Westpac Consumer sentiment unemployment index, both of which point to a weak labour market.
2) The persistence of the unemployment rate at 6% with the participation rate rising from 64.6 to 64.8 suggests that there is still some slack in the employment market. So inflation won’t get a kick from wages anytime soon.
3) The fall in seasonally-adjusted hours worked of 0.86% over the month to 1,608.9 million hours confuses the bullish take on this data a little, although the ABS did say that in trend terms hours worked still rose 0.1% to 1,610.8 million hours.
Bottom line: this data is a solid report which should go some way in assuaging the concerns of consumers about their employment prospects in the months ahead. But improved prospects mean more people in the work force which puts upward pressure on the unemployment rate.
So for now the RBA’s period of interest rate stability remains. But they will be very happy with this data as it tells us a lot more Australian families will be taking home a pay cheque this week.
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