Australia’s unemployment rate rose to 4.3 percent in February, surprising economists and raising concerns about the potential for further interest rate hikes, according to data released Thursday by the Australian Bureau of Statistics.
The increase, from 4.1 percent in January, was driven by a 35,000 rise in the number of unemployed people, despite an increase of 48,900 in the number of employed individuals. The participation rate also climbed, reaching 66.9 percent, indicating more people are actively seeking perform. Sean Crick, head of labour statistics at the ABS, noted that fewer unemployed individuals transitioned into employment in February compared to recent years, and more people remained unemployed for longer periods.
The figures arrive after the Reserve Bank of Australia (RBA) recently increased interest rates to 4.1 percent, citing persistent inflation as a key driver. Economists are now debating whether the RBA will consider another rate increase when the board next meets in May, despite the uptick in unemployment. The RBA has indicated that the labour market remains “too tight” to meet its inflation target.
While the economy added nearly 49,000 jobs in February, the quality of those jobs is shifting. A significant increase was seen in part-time roles – approximately 79,000 – while full-time positions decreased by around 30,000. There’s also a trend of older Australians, aged 65 and over, entering or remaining in the part-time workforce, potentially reflecting both a longer-term shift in retirement patterns and the financial pressures caused by rising costs of living.
The conflict in the Middle East is contributing to global oil price increases, which are driving up costs within Australia and complicating the RBA’s efforts to control inflation. Treasury projections suggest that if oil prices remain around $US100 a barrel for the first half of the year, economic growth may only see a slight easing to around 2 percent. However, sustained prices at $US120 a barrel could significantly depress gross domestic product.
Economists forecast the unemployment rate will continue to rise, potentially reaching 4.6 percent over the next few years as the RBA prioritizes bringing inflation back within its 2-3 percent target range. This increase is expected to stem from slower job creation rather than widespread layoffs. Treasurer Jim Chalmers has warned that inflation could reach 5 percent this year, further fueling the debate over the appropriate monetary policy response.
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