Australia’s Employment Drops in February, Sending Currency Lower
Australian employment surprisingly dropped in February, sending the currency and government bond yields lower and validating the Reserve Bank’s decision to cut interest rates.
Employment declined by 52,800 — led by full-time roles — compared with a forecast 30,000 increase, data from the statistics bureau showed on Thursday. The jobless rate held at 4.1% as expected, reflecting a fall in participation.
The Australian dollar slipped 0.4% and yields on policy sensitive three-year government bonds also declined as traders lifted expectations on rate cuts this year. The benchmark stock index extended gains to 0.9%.
The result follows the RBA’s decision to cut the cash rate by a quarter percentage-point to 4.1% on Feb. 18 as it gains confidence that inflation is steadily easing. At the same time, global markets have been roiled by a spate of tariff announcements and threats from the Trump administration that targeted US allies such as Europe and Canada and competitors like China.
A weaker labor market comes at a difficult time for Prime Minister Anthony Albanese’s Labor government as it prepares for an election due by mid-May. The opposition Liberal-National coalition holds a slight edge in polls with the government having been blamed for rising living costs over the past couple of years due to high inflation and elevated borrowing costs.
Source: Bloomberg
