Investing.com-- Australia’s job market unexpectedly shrank in February amid falling levels of employment among older workers, although a high participation rate and steady unemployment showed that the labor sector remained tight.
The total number of employed people fell by 52,800 in February, data from the Australian Bureau of Statistics showed on Thursday. This compared to expectations for growth of 30,800 people.
Australia’s participation rate- which gauges the percentage of the population that is in the labor sector- fell to 66.8%, against expectations it would remain at a record-high 67.3%.
But despite the drop in employment figures, the unemployment rate remained steady at 4.1%.
ABS officials said that February’s fall was driven chiefly by “fewer older workers returning to work in February,” but that the labor market remained tight, especially with participation close to record highs.
Australia’s labor market has remained tight over the past three years, amid a shortage of skilled workers and an abundance of open positions. While this has helped underpin spending and inflation to some extent, Australian wage growth has somewhat stagnated.
Still, sustained signs of cooling in the labor market could eventually give the Reserve Bank of Australia enough headroom to lower rates further, after a 25 basis point cut in February.
The RBA signaled a data-driven approach to future easing, with inflation and the labor market being its biggest considerations.