Unemployment edges up to 5.6 per cent despite more jobs created

Updated

Australia's unemployment rate has ticked up to 5.6 per cent despite another 18,000 new jobs being created in February.

The increase in the employment numbers was focused on full-time work, where the number of full-time jobs increased by 64,900, while part-time job numbers fell by 47,500.

Job numbers have now grown for a record 17 consecutive months according to Australian Bureau of Statistics data.

Capital Economics Paul Dales said the increases in both unemployment and underemployment highlighted wage growth is unlikely to rise any time soon.

The quarterly measure of the underemployment rate — those who have a job but who want to work longer — rose from 8.3 per cent in November to 8.4 per cent.

The underutilisation rate — the sum of unemployment and underemployment rates— edged up to 13.9 per cent.

"That's not a big deal, as it remains below the peak of 14.7 per cent a year ago, but it is disappointing that the overall amount of spare capacity is not declining," Mr Dales said.

"As such, these data go some way to dashing any remaining expectations that a decent rise in wage growth will prompt the RBA to raise interest rates this year."

RBC's Su-Lin Ong described the figures as mixed, with full-time jobs bouncing back and higher participation and unemployment rates.

"Of more significance was the rise in the underemployment rate in the three months to February, the first increase in 12 months," Ms Ong said.

"It remains elevated by historical standards and consistent with ample slack in the labour market," she said.

Ms Ong said the downward trend in underemployment was consistent with slowing employment generation.

"[This] is running at a rate that is not sufficient to continue to erode excess capacity," Ms Ong said.

"Wages growth will, accordingly, struggle to pick up much on a sustained basis."

South Australia now stands alone as the state with the highest unemployment rates rising from 6.1 per cent in January to 6.3 per cent in February.

Queensland is not far behind at 6.2 per cent.

Only New South Wales and the Northern Territory saw their unemployment rates drop.

Topics: business-economics-and-finance, unemployment, population, economic-trends, australia

First posted