Australian employment has been restored to its pre-pandemic level 11 months after the onset of the crisis as today's much stronger-than-expected report from the ABS for February showed employment surged by 88.7k in the month, vastly outperforming the median estimate for a 30.0k rise. The national unemployment rate fell sharply to 5.8% from 6.3%, though it is still much higher than its pre-pandemic level of 5.2%.
Labour Force Survey — February | By the numbers
- Employment (on net) advanced by 88.7k in February, well ahead of the 30.0k rise anticipated, while January's outcome was revised up to a 29.5k gain from 29.1k.
- National unemployment fell from 6.3% (revised from 6.4% reported intially) to 5.8%, against 6.3% expected and well down from the July peak of 7.5%.
- The participation rate was broadly unchanged at 66.1%, slightly above its pre-pandemic level after collapsing to as low as 62.6% back in May; a then 22-year low.
- Hours worked rebounded sharply by 6.1% in the month to 1.767bn hours after falling by 4.9% in January due to a larger-than-usual share of the workforce taking annual leave, with the level broadly flat over the year at 0.2% from -5.9%.
Labour Force Survey — February | The details
Employment in Australia was restored to its pre-pandemic level at just above 13 million after a much stronger-than-expected gain of 88.7k in February. The emergence of the pandemic and associated restrictions saw employment collapse by 873k over April and May, but the recovery over the ensuing months was v-shaped, with the only setback coming in September (-49.1k) when Victoria was shutdown.
Employment in February was driven entirely by the full-time segment (+89.1k) as part-time work broadly held steady (-0.5k). This was the 5th consecutive month in which full-time employment has outperformed the part-time segment, something which speaks to the broadening out in the recovery as the shock of the pandemic has dissipated. In the months after the national shutdown was eased, it was part-time employment that was driving the employment recovery as the easing of restrictions allowed some of the more heavily affected industries to reopen. Total and full-time employment is now in line with pre-pandemic levels, while part-time employment has slipped slightly below where it was in March 2020 (-0.4%) after a couple of soft outcomes.
Hours worked rebounded in February (6.1%m/m) from a low base in the month prior where a larger share of the workforce reported taking annual leave, which many had been stored up when the shutdowns were in place. As an aside, the rebound would have been even stronger but for a fall in Western Australia (-4.2%m/m) after the state was placed into a snap shutdown. The level of hours worked nationally was broadly in line with where it was a year earlier (+0.2%) but still slightly below its pre-pandemic level (-0.7%). Full-time hours rebounded by 7.5%m/m (from -5.7%) and part-time hours were a little softer again easing by -0.2%m/m (from -1.3%). Both full-time (-0.7%) and part-time hours (-0.4%) were lower than their pre-pandemic levels in February. The ABS reported that at the peak of the crisis, there were around 766.8k employed Australians working zero hours due to economic reasons but this had figure had fallen to 126.5k by February.
With the participation rate little changed in February (66.1% from 66.05%), the strong employment outcome easily surpassed growth in the labour force, resulting in a sizeable fall in the unemployment rate to 5.83% from 6.34%. However, that is still above its pre-pandemic level of around 5.2% and is well above the low 4s that the RBA is looking to achieve. The underemployment rate backed up in the month to 8.53% from 8.14%, possibly reflecting the weakness in part-time employment, though it was still lower than in March 2020 (8.8%). Meanwhile, the underutilisation rate continued its descent from its May peak (20.15%) as it fell to 14.36% from 14.48%.
From a state perspective, employment was led by New South Wales (42.0k) in February, with Victoria (26.6k) and Queensland (23.9k) also making strong contributions to the national increase. Employment in Queensland and Tasmania is above pre-pandemic levels, with Victoria, New South Wales and Western Australia all just below, while there remains a more noticeable gap back to South Australia.
Labour Force Survey — February | Insights
Today's was a very strong report; the standout aspects being the elevation in the employment number to 88.7k after the gains of 46.3k in December and 29.5k in January and the sizeable fall in the unemployment rate to around 5.8%. Despite setbacks in several states along the way, the key to the rebound that has taken place over the past 9 months has been that the reopening nationally has been sustained. An economy that has largely remained open has been able to adjust and adapt to the covid crisis, enabling workers to move between industries still heavily affected to others performing much better. While there is still the hurdle of the end of the Federal Government's JobKeeper wages subsidy to clear, the recovery to date has performed better than could have been expected, though we are still a long way from what could be considered a tight labour market.
