Unemployment has fallen but experts expect it is a small ray of light in what will be a dark year for jobseekers.
The jobless rate dropped back to 6.3 per cent in February, from January’s 12-year high of 6.4 per cent, as 15,000 new jobs were added to the economy, including 10,000 full-time positions.
The collective hours worked by all Australians also rose by 13 million hours, or 0.8 per cent, to a record high, suggesting there’s more work out there needing to be done.
Despite the bright spots of news, some economists are still predicting unemployment will reach 6.75 per cent in 2015.
The main reason for the fall in unemployment was a drop in workforce participation – the number of people that have a job, are looking for work or are ready to start work – Citi economists said.
“The Reserve Bank will want to see declining unemployment from faster job creation, not from falling labour force participation,” they said.
The numbers also highlight the reluctance of businesses to invest.
“It appears that businesses have enough work to go on with but are working existing staff a little more intensively before going down the route of taking on more staff,” CommSec chief economist Craig James said.
ANZ economists said demand for new workers appeared to be strengthening, with nine straight months of rising job advertisements.
But that was still “insufficient to keep pace with retrenchments in industries such as mining and manufacturing”, they said.
“In trend terms, employment growth is currently running at 14,000 per month, which remains insufficient to keep pace with trend labour force growth of 17,000,” ANZ economists said.
“As a result, we anticipate the unemployment rate gradually rising from here and remaining at an elevated level for an extended period.”
AMP Capital chief economist Shane Oliver also said unemployment is set to trend higher, while interest rates will likely drift lower.
“Our view remains that the RBA will cut the cash rate again to two per cent in the next two months, with a high chance it will cut below that during the second half of the year,” he said.
STATE BY STATE JOBLESS RATES IN FEB
- NSW – 6.3pct, unchanged from Jan
- Vic – 6.0pct, down from 6.6pct
- Qld – 6.7pct, up from 6.5pct
- SA – 6.9pct, down from 7.2pct
- WA – 5.8pct, up from 5.6pct
- Tas – 6.6pct, unchanged