This is down slightly from January's unemployment figure of 4.2%.

ABS head of labour statistics Bjorn Jarvis said this was the lowest unemployment rate since August 2008.

"[This is] only the third time in the history of the monthly survey when unemployment was as low as 4.0% - February 2008, August 2008, and February 2022," Mr Jarvis said.

"Lower unemployment rates occurred in the series before November 1974, when the survey was quarterly."

The unemployment rate for women hit 3.8% while it was 4.2% for men.

Overall employment increased by 77,000 people, with unemployment falling by 19,000.

Underemployment also fell slightly by 0.1 percentage point to 6.6% - the lowest underemployment rate since November 2008.

Covid's Omicron variant continues to play on the numbers, with people testing positive sent home from work.

Hours worked is still 0.5% below December 2021 levels and there continues to be an elevated number of employed people (more than 200,000) unable to work at all due to staying home on sick or personal leave.

Juggling the unemployment, participation and wages equation

The participation rate hit an all time high, rising 0.2 percentage points to 66.4%, but more people participating in the workforce could ironically keep the unemployment rate higher.

Westpac economist Justin Smirk said for the unemployment rate to push below 4%, the participation rate would need to stay steady.

"If participation does not rise as expected and the projected employment growth is achieved then we will see a much lower unemployment rate that the 3.8% forecast," Mr Smirk said.

"It is also possible that if participation does not rise as expected, firms may not be able to attract workers that are suitable to their needs and hence the lack of supply could be brake on stronger employment growth."

Australian population growth also slowed to 0.3% over the year to the September quarter of 2021.

Housing Industry Association senior economist Nick Ward said this exacerbates the worker shortage.

"Migration is an important source of young people, including workers. The reversal of migration is almost certainly contributing to the worker shortages that businesses are experiencing," Mr Ward said.

However, labour shortages generally push the wage price index up, as employers compete for employees.

The wage price index continues to lag behind underlying inflation at 2.3% and 2.6% respectively.

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