At this time (March 20, 2025), the Australian Bureau of Statistics launched the most recent – Labour Drive, Australia – for February 2025. The contraction in general employment development, the participation price, and the employment-population ratio are all indicators of a deteriorating state of affairs. Unemployment all the time lags behind the employment dynamics due to the participation price actions, which implies that the state of affairs is worse than the unemployment price indicators. The official unemployment price was a gradual 4.1 per cent but when we regulate for the altering participation then the underlying price is about 4.7 per cent. That implies that the 97.5 thousand LESS employees within the labour drive as a result of falling participation have entreed the ranks of the hidden unemployed. We also needs to not disregard the truth that there may be nonetheless 9.9 per cent of the working age inhabitants (round 1.5 million folks) who can be found and keen however can’t discover sufficient work – both unemployed or underemployed and that proportion is rising. Australia shouldn’t be close to full employment regardless of the claims by the mainstream commentators and it’s exhausting to characterise this as a ‘tight’ labour market.
The abstract ABS Labour Drive (seasonally adjusted) estimates for February 2025 are:
- Employment fell 52,800 (-0.4 per cent) – full-time employment fell by 35.7 thousand (=0.4 per cent) and part-time employment fell by 17 thousand (-0.4 per cent). Half-time share of complete was 30.6 per cent.
- Unemployment fell 11,200 to 612,600 individuals.
- The official unemployment price was regular at 4.1 per cent.
- The participation price fell 0.4 factors to 66.8 per cent.
- The employment-population ratio fell 0.3 factors to 64.1 per cent.
- Mixture month-to-month hours fell 8 million hours (-0.4 per cent).
- Underemployment price fell 0.1 level to five.9 per cent – underemployment fell 19.9 thousand. General there are 887.3 thousand underemployed employees. The full labour underutilisation price (unemployment plus underemployment) fell 0.2 factors to 9.9 per cent. There have been a complete of 1499.9 thousand employees both unemployed or underemployed.
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The ABS Media Launch (March 20, 2025) – Unemployment price stays regular at 4.1% in February – famous that:
The seasonally adjusted unemployment price remained regular at 4.1 per cent in February …
With employment falling by 53,000 folks and the variety of unemployed falling by 11,000 folks, the unemployment price remained at 4.1 per cent …
Seasonally adjusted month-to-month hours labored fell by 0.4 per cent in February 2025, in step with the share fall in employment …
The underemployment price decreased 0.1 proportion factors to five.9 per cent in February 2025 …
The underutilisation price, which mixes the unemployment and underemployment charges, decreased 0.2 proportion factors to 9.9 per cent. This was 4.0 proportion factors decrease than March 2020.
Basic conclusion:
1. Employment development contracted in February and participation fell which was the one motive that the unemployment price was regular.
2. Had the participation price not fallen by 0.4 factors, the unemployment price would have been 4.7 per cent relatively than the official price of 4.1 per cent (see beneath for particulars).
Employment fell 52.8 thousand0 (-0.4 per cent) in February 2025
1. Full-time employment fell by 35.7 thousand (=0.4 per cent) and part-time employment fell by 17 thousand (-0.4 per cent).
2. The employment-population ratio fell 0.3 factors to 64.1 per cent.
The next graph present the month by month development in complete, full-time, and part-time employment for the 24 months to January 2024 utilizing seasonally adjusted knowledge.
The next desk supplies an accounting abstract of the labour market efficiency during the last six months to supply an extended perspective that cuts via the month-to-month variability and supplies a greater evaluation of the tendencies.
Given the variation within the labour drive estimates, it’s generally helpful to look at the Employment-to-Inhabitants ratio (%) as a result of the underlying inhabitants estimates (denominator) are much less cyclical and topic to variation than the labour drive estimates. That is another measure of the robustness of exercise to the unemployment price, which is delicate to these labour drive swings.
The next graph exhibits the Employment-to-Inhabitants ratio, since April 2008 (that’s, for the reason that GFC).
The employment-to-population ratio declined again to the comparatively secure degree that we’ve got seen since 2022.
For perspective, the next graph exhibits the typical month-to-month employment change for the calendar years from 1980 to 2024.
1. The typical employment change over 2020 was -10.6 thousand which rose to 34.9 thousand in 2021 because the lockdowns eased.
2. For 2022, the typical month-to-month change was 44.5 thousand, for 2023, the typical change was 30.7 thousand, and for 2024, the typical month-to-month change was 34.4 thousand.
3. The typical (to date) for 2025 (one commentary) is -11.2 thousand – which is tough to interpret given solely 2 observations can be found.
The next graph exhibits the typical month-to-month adjustments in Full-time and Half-time employment in 1000’s since 1980.
Mixture month-to-month hours fell 7.8 million or 0.4 per cent
The next graph exhibits the month-to-month development (in per cent) during the last 24 months.
The darkish linear line is an easy regression development of the month-to-month change.
Unemployment fell 11,200 to 612,600 individuals in February 2025
The drop in participation was the one motive the unemployment price didn’t enhance this month given the drop in employment.
See beneath for the participation impact.
The next graph exhibits the nationwide unemployment price from April 1980 to February 2025. The longer time-series helps body some perspective to what’s taking place at current.
What was the impression of the declining participation price on unemployment in February 2025
The query is what would the unemployment price have been, given the numerous employment development in January, if the participation price had not risen and dragged extra employees in to the labour drive?
These ideas assist us reply the sort of query:
- The labour drive is a subset of the working-age inhabitants (these above 15 years previous). The proportion of the working-age inhabitants that constitutes the labour drive is named the labour drive participation price. Thus adjustments within the labour drive can impression on the official unemployment price, and, consequently, actions within the latter must be interpreted rigorously. A rising unemployment price might not point out a recessing financial system.
- The labour drive can broaden because of common inhabitants development and/or will increase within the labour drive participation charges (and vice versa).
The next Desk exhibits the breakdown within the adjustments to the primary aggregates (Labour Drive, Employment and Unemployment) and the impression of the autumn within the participation price.
The change within the labour drive in February 2025 was the result of two separate components:
- The underlying inhabitants development added 33.6 thousand individuals to the labour drive. The inhabitants development impression on the labour drive mixture is comparatively regular from month to month; and
- The autumn within the participation price meant that there have been 97.5 thousand LESS employees within the labour drive (relative to what would have occurred had the participation price remained unchanged).
- The web end result was that the labour drive fell by 63.9 thousand.
Evaluation:
1. If the participation price had not have fallen in February 2025, complete unemployment, given the present employment degree, would have been 710.1 thousand relatively than the official depend of 612.6 thousand as recorded by the ABS – a distinction of 97.5 thousand employees (the ‘participation impact’).
2. With out the autumn within the participation price, the official unemployment price would have been 4.7 per cent (rounded) relatively than its present official worth of 4.1 per cent).
Broad labour underutilisation fell 0.2 factors to 9.9 per cent in February 2025
1. Underemployment price fell 0.1 level to five.9 per cent – underemployment fell 19.9 thousand.
2. General there are 887.3 thousand underemployed employees.
3. The full labour underutilisation price (unemployment plus underemployment) fell 0.2 factors to 9.9 per cent.
4. There have been a complete of 1499.9 thousand employees both unemployed or underemployed.
Evaluation:
The decline in general labour underutilisation must be seen within the context of the declining participation price and falling employment.
Hidden unemployment clearly rose and brought collectively signifies a slowing within the labour market in February.
The next graph plots the seasonally-adjusted underemployment price in Australia from April 1980 to the February 2025 (blue line) and the broad underutilisation price over the identical interval (inexperienced line).
The distinction between the 2 traces is the unemployment price.
Teenage labour market – defies the general motion in February 2025
Whereas complete employment contracted in February 2025, general teenage employment rose by 10.8 thousand with full-time employment rising by 0.3 thousand and part-time employment rising by 10.6 thousand.
The next Desk exhibits the distribution of internet employment creation within the final month and the final 12 months by full-time/part-time standing and age/gender class (15-19 yr olds and the remainder).
To place the teenage employment state of affairs in a scale context (relative to their dimension within the inhabitants) the next graph exhibits the Employment-Inhabitants ratios for males, females and complete 15-19 yr olds since July 2008.
You may interpret this graph as depicting the change in employment relative to the underlying inhabitants of every cohort.
By way of the latest dynamics:
1. The male ratio fell 0.1 level over the month.
2. The feminine ratio rose 1.0 level over the month.
3. The general teenage employment-population ratio rose 0.5 factors over the month.
Conclusion
My customary month-to-month warning: we all the time must watch out decoding month to month actions given the way in which the Labour Drive Survey is constructed and applied.
My general evaluation is:
1. The contraction in general employment development, the participation price, and the employment-population ratio are all indicators of a deteriorating state of affairs.
2. Unemployment all the time lags behind the employment dynamics due to the participation price actions, which implies that the state of affairs is worse than the unemployment price indicators.
3. Nonetheless, it’s clear that the 97.5 thousand LESS employees within the labour drive as a result of falling participation will imply that hidden unemployment has risen by round that a lot.
4. We must always not disregard the truth that there may be nonetheless 9.9 per cent of the working age inhabitants (round 1.5 million folks) who can be found and keen however can’t discover sufficient work – both unemployed or underemployed and that proportion is rising.
5. Australia shouldn’t be close to full employment regardless of the claims by the mainstream commentators and it’s exhausting to characterise this as a ‘tight’ labour market.
That’s sufficient for in the present day!
(c) Copyright 2025 William Mitchell. All Rights Reserved.