Australia Unemployment Rate Slides to 3.5% Despite RBA Rate Hikes

Bob Mason
Published: Mar 16, 2023, 03:57 UTC

Economic data from Australia impressed today, with a sharp rise in full employment bringing the Australian unemployment rate down to 3.5%.

Australia employment jumps in February - FX Empire

In this article:

It was a relatively busy start to the Asian session. While economic data from New Zealand disappointed, economic indicators from Australia continued supporting a more hawkish RBA. The Australian unemployment rate declined in February.

Australian labor market numbers drew interest this morning. With the RBA floating the idea of pausing interest rate hikes, today’s numbers could refuel hawkish bets.

Employment surged by 64.6k in February versus a forecasted 48.5k rise. In January, employment fell by 11.5k. Full employment figures were also impressive, rising by 74.9k to reverse a 43.3k slide in January.

As a result of the sharp increase in employment, the unemployment rate fell from 3.7% to 3.5%.

According to the ABS,

  • The participation rate increased to 66.6%
  • Underemployment declined to 5.8%, with the employment-to-population ration rising to 64.3%.
  • While full-time employment saw a sizeable increase in February, part-time employment fell by 10,300.

The sharp rise in employment came despite a string of RBA interest rate hikes and supported more hawkish RBA policy moves. However, AUD/USD showed a relatively muted reaction to the solid employment numbers.

Investor reaction to the latest news from the banking sector weighed on riskier assets. On Wednesday, Credit Suisse Group AG (CSGN) slumped by 24.24% as investors responded to the bank’s largest shareholder stating it would not provide further financial assistance.

Following the collapse of Silicon Valley Bank (SIVB) and Signature Bank (SBNY), contagion fears resurfaced on Wednesday and spilled into the Asian session this morning. The threat of a global banking crisis could force central banks to reconsider policy moves and assess the impact of synchronized interest rate hikes on banks.

Earlier this morning, GDP numbers from New Zealand weighed on the NZD/USD. In Q4, the New Zealand economy contracted by 0.8% versus a forecasted -0.2% contraction. The economy expanded by 1.7% in Q3. The numbers sent the Kiwi Dollar deep into the red.

AUD/USD Reaction to Australian Unemployment Rate

Ahead of today’s employment figures, the AUD/USD fell to an early low of $0.65897 before rising to a pre-stat high of $0.66318.

However, the Aussie Dollar rose to a current session high of $0.66429 in response to the stats before falling to a post-stat low of $0.66154.

This morning, the Aussie Dollar was up 0.08% to $0.66231.


Up Next

Looking ahead to the US session, it is a busy day on the US economic calendar. US jobless claims, Philly Fed Manufacturing PMI, and housing sector data will be in focus.

We expect the jobless claims and Philly Fed Manufacturing PMI to garner the most interest.

However, there are also no FOMC member speeches to consider. The Fed entered the blackout period on Saturday, leaving investors to consider how the Fed would respond to the numbers.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

Did you find this article useful?