Unemployment remains at 5% as job market tightens

The latest Australian Bureau of Statistics data shows the unemployment rate remained at 5% in February, indicating the labour market is reaching full capacity.

The figures show the number of people employed dropped by more than 10,000 to 11.41 million in February, despite the market expecting a 20,000 rise.

The number of people in part-time employment fell by 57,000 people to 3.34 million, although this was offset by a 47,600 rise in full-time workers to 8.07 million. The participation rate dropped 0.1 points to 65.7%.

Matthew Tukaki, chief executive of business advisory firm The Sustain Group, says the ABS data shows further economic stabilisation, but a return to full employment could put pressure on interest rates and inflation.

“Most economists agree that we are heading back towards full employment… With that, however, comes a limited supply of skilled workers in the economy across a multitude of industry sectors,” Tukaki says.

“At the very basic level of vocational and technical skills, such as builders and carpenters, electricians and mechanics, we need to be conscious of what is happening from sector to sector.”

“If we just look at those skill sets, then what you actually begin to see is a significant increase in the domestic skills market that has the potential to significantly increase wage demand.”

“This in turn runs a risk of super heating the employment market to the point where pressure is put on inflation and, in turn, interest rates.”

The ABS figures are in contrast to those released by Roy Morgan, which shows unemployment remains steady at 7.9% while a falling workforce is driving down employment.

In February 2011, total unemployment as measured by Roy Morgan was 927,000, down 21,000 from January 2011, but up 20,000 since February 2010.

Full-time employment in February was down by 107,000 to 7,468,000 since January, while part-time employment was down by 221,000 to 3,302,000 since January.

According to Roy Morgan, there are now 524,000 Australians looking for full-time work [and] an additional 403,000 Australians are looking for part-time work.

Meanwhile, the latest data from jobs site SEEK shows the number of job advertisements place nationally increased in February by 1.5%.

SEEK managing director Joe Powell says the economy continues to demonstrate resilience and show signs that a return to a tighter labour market is not far away.

“Following February’ figures, it will be interesting to see how the employment rate pans out over the coming months,” Powell says.