The latest job figures show that unemployment has fallen from its 12-year high of 6.4 per cent, easing to 6.3 per cent in February following the Reserve Bank of Australia's decision to slash interest rates by 25 basis points.
According to the Australian Bureau of Statistics data, 15,600 more people were employed in February compared to January. 10,300 of those were full-time positions, while 5,300 were for part-time roles.
Unfortunately however, economists believe the recovery will only be temporary with many analysts forecasting further increases in unemployment through 2015. In fact, Alan Oster, Chief Economist for National Australia Bank, believes unemployment will hit 6.7 percent this year following the bank's latest business confidence survey.
The fact is confidence remains low in Australia and businesses are becoming much less willing to spend – even despite the Reserve Bank's efforts to ease monetary policy. A further one or two interest rate cuts are expected over the coming months.
The market reacts
While foreign exchange traders rewarded the local currency immediately after the results were released, the Australian dollar has since retreated, hitting a new six-year low of just US 75.74 cents.
However, the positive figures have certainly been well received by equity investors who have pushed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) more than 1% higher. While the gains have been widespread, the country's biggest banks are doing the heavy lifting with Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd. (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) all up more than 1.3%.
Telstra Corporation Ltd (ASX: TLS) and Macquarie Group Ltd (ASX: MQG) have also risen 1.3% and 3.4% respectively.
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