-Riki Polygenis, ANZ Bank`s co-head of Australian economics
Australia's labour market improved in February amid sturdy full-time and part-time employment gains. While the unemployment rate eased from the highest level in 12 years to 6.3%, the job market remained soft, adding to expectations of another rate cut by the Reserve Bank of Australia. Some 15,600 jobs were added to the economy in February, with full-time positions rising by 10,300 as part-time roles increased by 5,300. The number of people, who became unemployed last month, dropped by 15,800 to 777,300 in total. At the same time, the participation rate declined from 64.7% to 64.6%. Despite the improved figures, the jobless rate remained among the highest levels since late 2002, reflecting the Australian economy in a bumpy exit from a massive mining investment boom that helped the nation avert recession for more than two decades.
In February the Reserve Bank of Australia said that the unemployment rate was likely to rise higher than their initial estimate of 6.5%, particularly as the business investment outlook continued to deteriorate. This was one of the main reasons why the central bank decided to cut interest rates to all-time low 2.25% at its February meeting, and why earlier this month the RBA hinted that more cuts are on the table. The market is pricing in at least one more rate reduction before the second half of this year.
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