Australia’s labor market took a hit in February, with employment falling by 52,800. That’s worse than the expected 30,000 job gain! This also marked a sharp reversal from January’s revised increase of 44,000 jobs.
Despite the drop in employment, the unemployment rate held steady at 4.1%, in line with expectations. Other key details from the report:
- Full-time jobs fell by 35,700
- Part-time employment declined by 17,000
- The participation rate slipped from January’s record 67.2% to 66.8%
- Monthly hours worked dropped by 0.4%
- Annual job growth slowed to 1.9% from 3.5%
The composition of job losses is particularly telling. In January, the economy added over 54,000 full-time jobs while shedding part-time roles, signaling strength in core employment. February flipped the script, with full-time jobs bearing the brunt of losses. The decline in hours worked adds further evidence that the labor market is cooling.
Link to Australia’s Labour Force Survey (February 2025)
The shift in labor market conditions, after several months of resilience, may signal that higher interest rates are finally having their intended effect on cooling demand in the economy.
Market Reaction
Australian Dollar vs. Major Currencies: 5-min
Overlay of AUD vs. Major Currencies Chart by TradingView
The surprise drop in employment likely provides the RBA with more confidence to consider additional policy easing in the coming months, especially with the unemployment rate still at relatively low levels compared to historical standards.
The Australian dollar, which had been trading in ranges ahead of the jobs report, dropped sharply at the employment miss as traders saw increased likelihood for RBA rate cuts.
However, an improvement in risk sentiment following gains in the previous US session has helped the currency recover some of its losses, though it remains broadly weaker (except against the New Zealand dollar).
