Australia’s unemployment rate has dropped back to 3.5% in February, according to data released by the Australian Bureau of Statistics (ABS).
ABS head of labour statistics Bjorn Jarvis said the drop is due to employment increasing by 65,000 people and the number of unemployed dropping by 17,000.
“This was back to the level we saw in December,” Jarvis confirmed. “The February increase in employment follows consecutive falls in December and January.
“In January, this reflected a larger than usual number of people waiting to start a new job, the majority of whom returned to or commenced their jobs in February.
“This was particularly evident in the South-East of Australia, with larger than seasonal numbers of people entering into employment across New South Wales, Victoria and the ACT.”
With the higher than usual number of people transitioning into employment in February, ABS said the number of people indicating they were waiting to start a new job returned close to normal levels.
In line with the increase in employment, the employment to population ratio increased 0.2 percentage points to 64.3% in February, back to the level in December 2022.
The participation rate rose 0.1 percentage point to 66.6% in February, also back to the level in December 2022.
The seasonally adjusted underemployment rate fell 0.3 percentage points to 5.8 per cent, while the underutilisation rate - which combines the unemployment and underemployment rates - fell 0.5 percentage points to 9.4%.
Apart from November 2022, when underutilisation was 9.3%, this was the lowest it had been since April 1982.
Jarvis said the underemployment rate is currently almost 3 percentage points lower than it was before the pandemic, saying there were falls over the past year underpinned by stronger growth in hours worked than in employment. He added that the low underutilisation rate, along with growth in hours worked, demonstrates the tightness in the labour market.
Meanwhile, ABS data showed that seasonally adjusted monthly hours worked increased by 3.9% in February 2023.
“Following the 2.1% fall in January, when more Australians than usual took annual leave, the hours worked in February bounced back strongly to a level similar to late 2022, and were 5.1% higher than February 2022,” Jarvis said.
“In February, there were also no major disruptions that affected peoples’ ability to work their normal hours, such as the widespread sickness or natural disasters that we have seen over recent years.”
Trend employment increased by 20,000 people (0.1%) in February 2023, and trend monthly hours worked increased 0.2%.
Jarvis said the latest increase in trend unemployment was only slightly below the monthly average for the 20 years before the pandemic.
"This now shows that, while underlying employment growth has slowed down compared with what we saw through much of 2022, it is still increasing at close to its long-term historical rate," Jarvis said.
The trend unemployment rate remained at 3.5% for the seventh consecutive month, while the trend underemployment rate fell slightly to 5.9%.
The trend participation rate fell less than 0.1 percentage point to 66.6 per cent.