Australian employment has significantly rebounded in February, while the jobless rate fell far below expectations, signalling the fact that the labour market was still tight and that recent weakness had been statistically overstated.
The Australian dollar rose 0.5 per cent to $0.6622, and bond futures decreased by 4 ticks to 96.35. Expectations for interest rate cuts by the Reserve Bank of Australia were reduced to 37 basis points from 44 bps.
In February, net employment surged by 116,500, the largest monthly gain in 10 years, surpassing market forecasts of a 40,000 increase. The jobless rate fell to 3.7 per cent, down from a recent high of 4.1 per cent.
The Australian Bureau of Statistics attributed the significant increase in employment to a change in the seasonal pattern, leading to volatile results.
RBA Governor Michele Bullock acknowledged the tight labour market but maintained a neutral stance on policy decisions.
Despite the strong employment figures, the RBA anticipates a slight increase in the jobless rate to 4.2 per cent by June and 4.3 per cent by the end of the year.
Analysts believe the RBA’s cautious approach was appropriate given the uncertainty in the labour market.
