Labour Market Remains Tight, Keeping Rate Hikes On Agenda

The March employment report didn’t show any signs of labour market easing. New jobs in Australia in March rose 53k, which was not only above consensus at 20k but above the highest forecast of 45k. The unemployment rate stayed at 3.5% and the participation rate at 66.7%. Full-time employment posted another very strong month with part-time contracting again, demonstrating that labour shortages persist. This data shows that the labour market remains very tight and continues to pose a risk to wages, and as a result makes another RBA hike a distinct possibility.

• Employment rose 53k in March after +63.6k in February to be up 3.3% y/y (Feb 3% y/y). The employment ratio rose 0.1pp and returned to around its Q4 2022 highs. Full-time employment rose 72.2k after 79.2k and is now 5.1% higher than a year ago, while part-time fell 19.2k after -15.6k to be down 0.8%. The ABS noted that over the last year, hours worked rose 5.5% compared to 3.3% for employment, as labour shortages have been partially filled with more hours.
• While the unemployment rate remained close to its 50-year low at 3.5%, the number of unemployed fell for the second consecutive month. They fell 1.6k after -15.9k to be down 7.5% y/y.
• The underemployment rate rose 0.4pp to 6.2% and underutilisation 0.3pp to 9.7%. They can be volatile but the 3-month averages were stable and very low.
• There has been a lot of attention recently on the increase in population growth with the RBA saying that it caught them by surprise. In March the population aged over 15 years rose another 0.2% m/m and 2.3% y/y, its fastest since April 2009. While this helps labour supply shortages, it will continue to put pressure on housing and rents.

Source: MNI - Market News/ABS