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'Truly remarkable': PM's praise as jobless rate plunges to 5.8 per cent

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Scott Morrison has talked up the recovery in employment, which has seen the unemployment rate shrink to 5.8 per cent.

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“In less than 12 months from when the recession began, caused by the COVID-19 pandemic, there are now more jobs in the Australian economy than there were before the pandemic,” the prime minister told reporters in Canberra.

“That is something that is truly remarkable.”

Employment jumped by 88,700 in February when economists had expected a more modest 30,000 increase, and featured an 89,100 rise in full-time workers, which was only partly offset by a small fall in part-time employment.

“The strong employment growth this month saw employment rise above 13 million people and was 4000 people higher than March 2020,” Australian Bureau of Statistics head of labour statistics Bjorn Jarvis said.

The unemployment rate unexpectedly tumbled to 5.8 per cent in February, its lowest level since of the outbreak of the COVID-19 pandemic last year.

It followed a downwardly revised 6.3 per cent in January.

The jobless rate has trended lower since hitting a 22-year high of 7.5 per cent during the depths of the recession in July.

However, it was still 0.6 percentage points above its March 2020 level at the start of the pandemic, leaving around 89,000 more people unemployed.

Treasurer Josh Frydenberg had pledged that the government will begin budget repair once the unemployment rate is comfortably below six per cent.

However, he says “5.8 per cent is not comfortably below six per cent”.

“The other point I would make is that the unemployment rate in February of last year was 5.1 per cent,” Frydenberg told reporters.

But he conceded the outlook will be bumpy and challenging when the JobKeeper wage subsidy ends on March 31.

JP Morgan economist Tom Kennedy agreed the end of JobKeeper, and changes to JobSeeker dole payment, present hurdles to the outlook.

“We anticipate the end of JobKeeper will see the pace of employment growth slow, and potentially partly reverse,” he said.

A new report warns the good fortunes retailers enjoyed coming out of last year’s recession may not last as government stimulus measures wind back.

Retail spending was one of the bright spots of the economy in the second half of 2020, which could spill over into the early stages of this year.

But Deloitte Access Economics says a return to more normal spending could mean 2020’s windfalls are temporary.

Retail spending ended 2020 on a strong note, with volumes surging 6.4 per cent over the year to December quarter.

But Deloitte expects spending will slow during the second half this year to be down 0.4 per cent for 2021.

“Our fiscal stimulus tap has been turned down to a drip, meaning less money for households to spend,” Deloitte Access Economics partner David Rumbens said.

He says while households are expected to spend up given the good news on vaccines and fewer restrictions, this is more likely to be on travel and hospitality.

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