Jobs growth slows- unemployment ticks up

The unemployment rate crept higher to 5.3 per cent in February, after January's figure was revised down to 5.2 per cent.

That means January's stunning fall in unemployment from 5.5 per cent was even larger than initially reported (the original figures showed unemployment at 5.3 per cent), but it also makes today's figures look slightly worse.

The February figures (which showed the creation of only 400 extra jobs) disappointed analysts, but not by much.

The average forecast in Bloomberg's survey of 25 economists was for an increase of 15,000 jobs, which would have left the unemployment rate steady at 5.3 per cent.

The good news in the Bureau of Statistics survey was that full-time employment increased by 11,400, while it was part-time employment that bore the brunt of the job losses (down 11,000).

That means aggregate monthly hours worked increased 2.4 per cent last month.

"The headline number was softer than expected but the details of the report are anything but soft. We had the sixth straight month of growth in full-time jobs and unemployment remains low, and fell further in New South Wales," Brian Redican, a senior economist at Macquarie, told.

"There was also a big bounce in aggregate hours worked, which is encouraging. So really, this changes nothing about the job outlook - it is still rock solid.

"However, it does give the RBA cover should they choose not to hike in April. That's still a close call." Return to full-time

Helen Kevans, an economist with JP Morgan, says the figures seem to indicate that employers are putting staff back onto full-time hours after cutting their hours during the downturn.

"That rise in full-time jobs in February was pretty much off-set by that decline in part-time jobs, and what we are seeing is a big shift from part-time to full-time work and that's because firms are reinstating worker hours," she told ABC News.

"Now remember in 2009 we did see a big drop in worker hours throughout the year, but we do think those hours will be rebuilt before firms actually start to hire new staff."

She says, even if the rate of improvement in unemployment slows, it is likely to be offset by existing employees receiving more hours at work.

"It is encouraging because as those worker hours are rebuilt, wages will be reinstated and then eventually wage growth will accelerate and that's got positive implications for spending in the economy more broadly," she added.

Stephen Roberts, an economist at Nomura, told that the figures will have a bigger impact on the Federal Government's bottom line than they will on interest rates.

"It's not the sort of numbers that will change where things will go from here with rates. I see 4.25 per cent by the end of the year," he said.

"The budget deficit will come [in] better than expected for this financial year, considerably better because there has been more growth. I see minus 3.4 per cent of GDP rather than [the] minus 4.9 per cent estimated by the government at the budget time."

The Australian dollar fell slightly on the weaker than expected jobs numbers to 91.28 US cents at 11:35am (AEDT), but has since bounced back to 91.42 US cents by 12:20pm.Michael Janda is the business reporter for ABC News Online

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Thu 11th March 2010 - 04:33pm