Jobs data bucks forecasts of weakening labour market momentum

The jobless rate has defied expectations and ticked lower but it’s always tricky getting a good read on jobs early in the year.

Pedestrians cross the road in front of Flinders Street Station in Melbourne, Thursday, March 21, 2019. Australia's unemployment rate fell 0.1 percentage points in February to a seasonally adjusted 4.9 per cent. (AAP Image/James Ross) NO ARCHIVING

The fall in the jobless rate to 4.9 per cent shows the labour force remains strong, with the number of people unable to find work having dropped by 34,000 over the last six months.

It is always tricky to get a clear picture of the labour market early in the year, because people leave the workforce at year-end while it takes until February and March for recent graduates to get a job.

The raw numbers show the workforce fell by 234,000 people in January before gaining 202,000 people in February, so the seasonally adjusted figures, showing a 38,300 gain in January followed by a 4600 gain in last month are not conveying much information.

Compared with February a year ago, there has been 2.3 per cent growth in the number of people with jobs, which is well in excess of the 1.7 per cent rise in the adult population, and sufficient to generate the continuing improvement in the jobless rate.

Many analysts have been expecting the labour market to lose momentum. A number predicted either a rise in the jobless rate in February or a fall in the numbers employed.

The last two sets of quarterly national accounts showed the tempo of economic growth slowed in the latter half of last year, while business surveys have shown increasingly difficult trading conditions, particularly in the high employing retail and construction sectors.

Indicators of labour demand, such as the number of job advertisements and survey responses about business hiring intentions show there has been some easing over recent months. The level of advertising is about 4 per cent below February a year ago in both the ANZ survey and the Seek online recruitment services count.

However, the level remains consistent with further growth in employment while an employment index compiled by the National Australia Bank on the strength of survey and vacancy data is consistent with continued hiring of around 19,000 people a month.