New figures show 53,000 Aussies left the workforce in February

Thursday’s unemployment figures have revealed another sign Australia’s economy has turned a corner.

More Australians decided to leave the workforce in a sign cost of living pressures are easing, an economist said.

Employment fell by 53,000 in February off the back of a spike in older workers quitting the workforce, against expectations of 30,000 new jobs created, Australian Bureau of Statistics figures show.

Overall, the unemployment rate held steady at 4.1 per cent, in line with market expectations.

KPMG chief economist Brendan Rynne said the large drop in employment was due to a more Aussies retiring as well as a fall in the female participation rate.

“It is possible that a combination of the stage 3 tax cuts, the February interest rate cut and some wages growth in partner incomes have done enough to ease household budgets and pull them back from looking for work,” Mr Rynne said.

The number of Aussies needing a job fell in February. Picture: NewsWire / Gaye Gerard

He said the fall in participation rate stopped a jump in unemployment, which would have been 4.7 per cent if every Australian in January was still wanted a job in February.

“It is not so straightforward as seeing this as workers simply losing heart with the current state of the jobs market, which traditionally explains downwards movements in the participation rate,” he said.

“KPMG’s interpretation of today’s data is more nuanced – one part of the explanation is that there has been a higher than average number of older workers leaving the labour market.

“It seems there is a pool of women who – with household budgets under pressure due to cost of living increases – were on the verge of looking for work (switching between unemployed and not in the labour force) over the past 3-6 months.”

This meant the employment to-population ratio fell in February by 0.4 percentage points to 64.1 per cent, which is still only 0.4 per cent off a record high set last December.

More Australians are in the workforce. Picture: NewsWire / John Appleyard

ABS head of labour statistics Bjorn Jarvis said despite the fall in employment in February, in seasonally adjusted terms it was still about 266,000 people – or 1.9 per cent – higher than last February. This annual growth rate is about the 20-year pre-pandemic average of 2.0 per cent.

”Fewer older workers returning to work in February contributed to the fall in employment this month, with lower levels of employment in the older age groups in February 2025 compared with 2024. This follows higher levels of employment in these age groups in recent years, particularly in 2024, alongside growth in the employment-to-population ratio over the last few years,” Mr Jarvis said.

”In contrast, we continue to see growth in employment for people aged between 15 and 54 over the year.”

Treasurer Jim Chalmers said while there were still challenges in the economy and people were still under pressure, the average unemployment rate was still the lowest of any government in 50 years.

“Low unemployment and much lower inflation is a remarkable combination when you look at our historical experience and what’s happening in other countries,” Mr Chalmers said.

“More than one million jobs have been created under Labor since the election, a record for a parliamentary term.”

Oxford Economics Australia head of macroeconomics forecasting Sean Langcake said the unemployment rate was holding steady, despite sharp movements in employment and unemployment numbers.

“Despite the volatility in headcount measures, the unemployment and underemployment rates edged a little lower in February, suggesting that the degree of spare capacity in the labour market did not meaningfully change,” he said.

“This looks like a sideways move for the labour market, which remains in a tight position.”

The uplift in Australians being added to the workforce comes after the Reserve Bank of Australia cut the cash rate for the first time since the Covid pandemic in February, dropping the rate from 4.35 to 4.1 per cent.

The bank’s new monetary policy board will meet on March 31 to April 1 to decide the cash rate, but markets are predicting the next cut will most likely come at the May meeting.

BDO economics partner Anders Magnusson said this week’s figures fell in line with RBA forecasts.

“That is important because the February forecast was unusual as it showed unemployment stabilising at 4.2 per cent over the next few years, rather than the previously expected 4.5 per cent,” he said.

“This adjustment reflects the ongoing strength of Australia’s job market, which has consistently added an average of 40,000 jobs per month over the past 12 months to January without adding to inflation.

“However, February saw a reduction in employed persons by 52,000 due to fewer older workers returning to work in February.”

Originally published as New figures show 53,000 Aussies left the workforce in February