A strong bounce in job numbers last month will maintain pressure on the Reserve Bank to keep increasing official interest rates, despite global banking jitters.

The unemployment rate fell back to 3.5 per cent in February, according to the Australian Bureau of Statistics, with almost 65,000 jobs estimated to have been added to the economy last month.

In an all around strong set of numbers, the proportion of Australians in work or looking for it also rose, along with hours worked, while underemployment fell.

“The underemployment rate is currently almost 3 percentage points lower than it was before the pandemic, with falls over the past year underpinned by stronger growth in hours worked than in employment,” said the bureau’s head of labour statistics Bjorn Jarvis.

“In February, there were also no major disruptions that affected peoples’ ability to work their normal hours, such as the widespread sickness or natural disasters that we have seen over recent years,” Mr Jarvis added.

‘Red hot’ numbers will prompt rate rise

In a recent speech, Reserve Bank governor Philip Lowe said the RBA would be looking at four key economic data points before deciding whether to pause or keep raising rates at its April 4 board meeting — the labour force figures were among those.

The December and January jobs data had shown some signs of weakness, with falls in employment and a jump in unemployment to 3.7 per cent from October’s 48-year low of 3.4 per cent.

However, both the ABS and RBA had attributed this to an unusually large number of people waiting to start a new job, who now appear to have done in February.

“This was particularly evident in the south-east of Australia, with larger-than-seasonal numbers of people entering into employment across New South Wales, Victoria and the ACT,” observed Mr Jarvis.

Capital Economics analyst Marcel Thieliant said the “red hot” jobs numbers should all but guarantee another Reserve Bank interest rate rise next month.

“February’s strong labour force figures will prompt the Reserve Bank of Australia to press ahead with another 25bp [basis point] hike at its April meeting despite mounting signs of strain in the global banking system,” he wrote.

“As things stand though, there are no signs of major stress in Australia’s financial system.

“The labour market figures released today underline that the economy is still operating well above sustainable levels and we expect the bank to press ahead with further tightening next month.”