Australia jobs February: Employment falls by 53,000 as older workers leave the market, ABS says

An exodus of older workers has put an end to Australia’s remarkable run of strong jobs growth, but the surprise numbers will be unlikely to spook the RBA.

Employment fell by 53,000 roles, according to seasonally-adjusted Australian Bureau of Statistics figures released on Thursday.

But the unemployment rate remained at 4.1 per cent, giving the Reserve Bank a reason to hold fire on a second interest rate cut.

Taken together, it means a significant number of Australians have left the jobs market — they are no longer looking for work or working.

The proportion of Australians participating in the market retreated from recent record highs, down 0.4 percentage points to 66.8 per cent.

ABS head of labour statistics Bjorn Jarvis said fewer older employees returned to jobs in February.

“This follows higher levels of employment in these age groups in recent years, particularly in 2024, alongside growth in the employment-to-population ratio over the last few years,” Mr Jarvis said.

“In contrast, we continue to see growth in employment for people aged between 15 and 54 over the year.”

Jobs numbers are still much stronger than before the pandemic, however.

The Aussie dollar dropped on the news and financial markets marginally dialled up bets on a rate cut.

But economists broadly said the jobs dip was not a big worry, despite consensus expectations that 30,000 roles would be created in the month.

Betashares chief economist David Bassanese said the “steep fall” in jobs figures should be taken with “a grain of salt” because statistical issues would need to be ironed out.

“Perhaps the best read on the underlying strength of the labour market comes from the unemployment rate, which held steady at 4.1 per cent,” he said.

“As a result, I continue to believe the labour market remains quite firm, albeit not to the extent that it should cause inflationary concerns given recent declines in wage growth.”

Mr Bassanese said the Reserve Bank would likely deliver a second interest rate cut in coming months if inflation continues to come under control.

ANZ’s Aaron Luk said the figures would not have a material impact on the RBA’s thinking, while EY’s Paula Gadsby said “underlying strength in (the) labour market supports a rate pause”.

“The Australian labour market remains in a strong position, despite a fall in employment in today’s labour force release,” Ms Gadsby said.

She said under-utilisation — part time and casual staff who want to work more hours — and youth unemployment were trending down and “far below pre-COVID levels”.

The latest jobs data came just hours after the US Federal Reserve kept interest rates on hold and said “economic activity has continued to expand at a solid pace”. America’s jobs market had stabilised, the Fed said.

Australian financial markets on Wednesday night had judged a rate reduction at the RBA’s meeting on April 1 would be unlikely, with just an 8 per cent chance of a cut. Traders were much more confident of a move by July.

Borrowers were given a dose of relief in February when the RBA lowered the cash rate by 25 basis points to 4.1 per cent.

More than 440,000 jobs were created through 2024 and the strong employment market made the RBA cautious about cutting rates too fast.