Super-low unemployment rate puts more focus on RBA
Australia’s unemployment rate has fallen to 4.0 percent in February 2022; a level of unemployment not anticipated to be achieved by the RBA until the middle of this year.
This is the lowest unemployment rate since February 2008 and August 2008, and we would need to go back to the mid-1970s to find a similar level of unemployment. Importantly, this super-low unemployment rate has occurred when participation in the labour force is at all-time highs – meaning the unemployment rate hasn’t just dropped due to workers withdrawing from the labour market.
These very strong labour market results, combined with the news overnight that the US Fed Reserve Chairman Powell will raise the Fed Funds Rate by 0.25 percent. A forecast of a further six 25bp rises over the rest of the year will add to the pressure facing the RBA Board to raise Australia’s cash rate sooner rather than later.
When we look at the state breakdown NSW saw the biggest fall in its unemployment rate; down 0.5 percent to a new figure of 3.7 percent.
An additional 77,400 workers found employment over the month
Hours worked has also rebounded strongly by nearly 9 percent following the return to work from summer holidays and also workers recovering from Omicron-related illness.