Key takeaways
Despite high interest rates and global uncertainty, Australia’s labour market has remained resilient over recent years.
But, February brought a surprise: employment fell by 52,800 jobs, despite expectations of a 30,000-job increase.
Yet, the unemployment rate held steady at 4.1%, and the number of unemployed people actually declined by 11,000.
Latest ABS data (Sep 2024 quarter) shows a slowdown in net overseas migration, driven by: Fewer arrivals (especially temporary visa holders) and Increased departures.
National auction clearance rate rose slightly to 62.9%, up from 59.1% the previous week.
Over the last couple of years, our employment markets have remained particularly strong, with skyrocketing job creation, record-low unemployment and high employment participation rates, despite all the challenges the economy, high interest rates and geopolitical problems have thrown at Australia.
In fact, in her February Parliamentary Testimony, RBA Governor Bullock questioned whether the labour market is too tight to continue to bring inflation back down to target.
But...the February Labour Force Survey delivered a significant surprise with a sizeable fall in headline employment, which was down by 52,800 compared to a market expectation of a rise of around 30,000 jobs.
What does this actually mean, and how does this relate to our economy?
That’s what I discuss today with Dr Andrew Wilson, chief economist of My Housing Market.
Labour market update
Watch this week’s Property Insiders chat as Dr Andrew Wilison summarises the latest figures:
- February unemployment rate was steady at 4.1% compared to January
- As a bit of a surprise jobs fell by 53,000 yet surprisingly, the number of people unemployed was down by 11,000 over the month
- Having said that 266,200 new jobs were created over the last year. In fact, total jobs are higher by 1.9%, with those unemployed up 61,300 (11.1%)
- The participation rate was down last month from January’s record high of 67.3% to 66.8%
- WA once again had the lowest unemployment rate at 3.4%.
- Over the last year, WA and Queensland had the greatest jobs growth and not surprisingly the strongest property markets.
Dr Wilson believes lower interest rates will continue to support a strong labour market moving forward.
So what’s going on with the latest stats:
The ABS noted:
“Fewer older workers returning to work in February contributed to the fall in employment this month, with lower levels of employment in the older age groups in February 2025 compared with 2024. 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”.
It is unclear whether this is a genuine signal of the rate of retirement picking up, or again statistical volatility.
The key question for the RBA, as Governor Bullock noted in her February Parliamentary Testimony, is whether the labour market is too tight to continue to bring inflation back down to target.
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She said:
“We still have, we think, a tight labour market, and let me absolutely say that this is a good thing—it's a good thing that people can get jobs. The question is: is it a little too tight to continue to bring inflation back down to the target and sustain it there? That's the million-dollar question. Some people think it is perfectly consistent; we're a little more wary. We think it's a little bit too tight, but we’re constantly re-examining our assumptions on this basis. We're constantly re-examining and looking for signs that it might be reflecting in prices. We're not seeing it yet but we're alert to it”.
Migration eases
Watch this week’s Property Insiders chat as Dr. Andrew Wilson explains what’s happening with migration to Australia as well as internal interstate migration within Australia.
The ABS also released population statistics last week.
The latest ABS statistics have some lag and show that over the year to the September quarter 2024, the population rose 1.8%; while in the September quarter itself population rose 0.4% q/q, which is around the long-run average.
This change in net overseas migration is led by a decrease in migrant arrivals, largely temporary visa holders, while departures increased during the same period.
It follows a period of multiple record increases in net overseas migration consistent with a catchup in arrivals following almost two years of border restrictions during the COVID-19 pandemic.
While typically Victoria gets more than its fair share of migrants, interestingly, more overseas migrants came to New South Wales than any other state.
On the other hand, more people left New South Wales as Queensland and Western Australia topped the internal migration list.
Generally steady auction results this week
As usual, Dr Wilson discusses the auction results in this week’s Property Insiders chat.
Auction results were generally steady this week although Melbourne and Sydney continue to produce the best results.
The national weekend auction market reported an average clearance rate of 62.9% over the past week which was higher than the 59.1% reported over the previous week – but also again below the 66.4% recorded over the same week last year.
