Fin-X Rapid Response 19th March 2026

Today's jump in Australia's February headline unemployment is much less concerning than it seems at first glance. It is unlikely to change the outlook for monetary policy. But the data raises interesting questions about changes in the composition of the workforce.

• Australian unemployment rose from 4.1% in January to 4.3% in February in seasonally-adjusted terms, according to the ABS today. Economists had been expecting the rate to remain at 4.1%.

• Despite the jump in seasonally adjusted unemployment, the less volatile trend series showed that unemployment declined from 4.3% in January to 4.2% last month.

• Hours worked echoed the difference in unemployment, with seasonally-adjusted hours falling by -0.17% while trend hours worked increased by +0.25%.

• +79.4k part-time jobs were added, while -30.5k full-time jobs were lost from the economy in February.

• The participation rate increased from 66.7% to 66.9% in seasonally-adjusted terms and remained at 66.8% in trend terms.

• The employment-to-population ratio remained at 64.0%, seasonally adjusted.

• Sean Crick, ABS head of labour statistics, said: "This month we saw fewer people who were unemployed and waiting to start a job in January move into employment in February, compared to recent Februarys. We also saw more people remaining unemployed this month compared to recent Februarys."

• He added: "This month we saw more people move into part-time employment, particularly those aged 65 and over. Additionally, this month we saw that fewer people are leaving jobs to retire compared to a year ago."

• S&P/ASX200 8,505 -1.6%, AUDUSD 0.7041 +0.2%, Aus 2yr 4.58% +8bp, Aus 10yr 4.96% +6bp

Fin-X Wealth View

The jump from 4.1% to 4.3% appears shocking. However, most of the difference is simply due to the noise of the report. The RBA is more likely to focus on the trend figures, which continue to indicate strength.

That said, there have been some interesting changes this year. January hours worked increased due to fewer Australians taking time off and resulting in hours worked growing by more than the number of people employed. This could be in part due to employer demand, as job advertisements also rose in January and February.

At the same time, older Australians appear to be working longer, albeit on reduced hours. It remains to be seen whether this is due to demand from employers, cost-of-living pressures, or changes in the way that people choose to transition to retirement. If lifestyle choices are the main reason, we would expect participation to increase in the months ahead.

At the moment, it is too soon to say whether demand for work or demand for workers is behind the changes.

Bond yields and RBA rate expectations have risen by approximately +10bps today, but seem largely attributable to the Israeli attack on the South Pars gas field overnight and the prospect of more prolonged supply disruptions.

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