By James Glynn
SYDNEY–Australia’s unemployment rate fell to 4.0% in February, its lowest since August 2008, bringing the economy closer to full employment and stoking calls for the central bank to raise interest rates for the first time since 2010.
The economy created 77,400 new jobs in February, well above the expected rise of 37,000, the Australian Bureau of Statistics said Thursday. Full-time employment jumped by 121,900 over the month.
“This is the lowest unemployment rate since August 2008 and only the third time in the history of the monthly survey when unemployment was as low as 4.0%,” the ABS said. Any further decline in unemployment will return it to levels not seen since 1974. The unemployment rate was 4.2% in January.
The further tightening of the job market will encourage bets that the RBA will raise interest rates by midyear, forced into action by rising inflation and accelerating employment growth.
Still, RBA Gov. Philip Lowe has only conceded that an interest rise is “plausible” this year. He has stressed the need to be patient as wages growth remains soft and inflation is not yet entrenched with the desired 2-3% target band.
The data is also confirmation that the Omicron variant of the Covid-19 virus did not derail Australia’s economic recovery when it peaked in December and January. That reinforces forecasts among many economists that the economy will grow rapidly in 2022.
Employment increased for the fourth month in a row in February and was around 202,000 people higher than the pre-Delta period high of June 2021, the ABS said.
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