Australia jobs dip, but full-time jumps

SYDNEY: Australian employment unexpectedly dipped in February in the first negative surprise for months and downward revisions to past jobs growth showed no net gains since November, suggesting the engine of the economy had stepped down a gear.

Still, full-time employment did surge 47,600 in February and the jobless rate held at a two-year low of 5.0 percent, as expected.

An unemployment rate under 5.0 percent has historically been associated with growing inflationary pressures and would add to the case for further gradual tightening by Reserve Bank of Australia (RBA).

STEPHEN ROBERTS, ECONOMIST, NOMURA:

"Very strong numbers. The labour force under utilisation rate is down to 11.7 pct, that's the lowest in about 3 years. That's a very tight labour market. Job data seems to be a better economic indicator than GDP because GDP data is never complete when you get it and is subject to huge revisions over time. Whereas these (job) numbers are on a monthly basis and give a more current view. I think anything below a 5 percent unemployment rate would add to inflation. I still have a rate hike in May and another one in Q3."

STEPHEN WALTERS, CHIEF ECONOMIST, JP MORGAN:

"It's a mixed bag and there were some big revisions in there, so I'm very cautious there is a lot of noise in the numbers given that the past few months have been very volatile. It's more important to look at the unemployment number, which has been at 5 percent for some time now. And I'd put a lot of weight on full-time employment numbers, which clearly indicates a very solid outcome. But I suspect there's a lot of seasonal volatility in the numbers.

"The labour market is in very good shape, it's very close to (what the RBA has called) full employment so there is very little spare capacity. We're still calling for a rate hike in May, but that's more pre-emptive than any sort of reaction to any number out there."

MARKET REACTION:

The Australian dollar initially slipped on the headline jobs number before bouncing on the full-time increase. Interbank futures were little changed as the data did nothing to change market expectations rates are likely on hold for a few months longer.