Strong jobs growth but jobless rate steady

The unemployment rate remained steady at 6.0 per cent in February, official figures show. Source: AAP

THE unemployment rate stayed at a decade high of six per cent in February, but there are plenty of signs of improvement in the jobs market.

The number of people with jobs rose by 47,300 in the month - the biggest rise in nearly two years - following a gain of 2,700 in January, the Australian Bureau of Statistics said on Thursday.

The participation rate - the proportion of the population that have a job, are looking for work or are ready to start work, rose to 64.8 per cent, from 64.6 in January, the ABS said.

RBC Capital Markets currency strategist Michael Turner described the figures as "stellar" and said the rise in the participation rate is a welcome development, given how much it had fallen recently.

"There's still a bit of slack in the labour force but the trend in employment looks to have improved noticeably over the past six months," he said.

"This fits well with the clear improvement in hiring intentions and ANZ job ad data over the past few months.

Mr Turner expects the unemployment rate to peak during the second quarter of 2014 at around 6.25 per cent.

"It's still uncertain how things will play out in the mining sector in the second half of the year but generally we think there will be slightly firmer outcomes for employment in the second half of the year," he said.

In recent testimony to parliament, Reserve Bank of Australia governor Glenn Stevens said he expects the unemployment rate to peak a little above six per cent in 2014.

Economic growth has strengthened in recent months, but employment growth had been quite weak.

Mr Stevens said this is because employment growth lags behind a rise in economic growth by one or two quarters.

Westpac senior economist Justin Smirk said the labour market was expected to turn around after a series of weak results in the second half of 2013.

"Westpac has been expecting, and forecasting, such an improvement in the labour market in 2014," he said.

"If it did not, this would have indicated that the Australian economy was dipping into something more like a recession."

Mr Smirk said the participation rate will return to its previous levels as the jobs market gets better and as more people feel encouraged to start looking for work.

"A better employment outcome should result in a lift in the participation rate and thus we expect to see a somewhat more flat participation rate over the next six months or so bringing it back more in line with what you would expect given the aging population," he said.

Full-time employment rose by 80,500 in February - the biggest rise in more than a decade - while part-time employment was down 33,300.

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