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MNI BRIEF: Strong Aussie Jobs Keeps RBA Hike On Radar

MNI (PERTH)
(MNI) Perth

Another 25bp hike by the Reserve Bank of Australia remains on the radar after the unemployment rate fell more than expected, according to data from the Australian Bureau of Statistics released on Thursday.

Governor Philip Lowe cited February labour force data as one of four key indicators he would watch ahead of the April 4 meeting, with the addition of a better-than-expected 64,600 jobs and a drop in the unemployment rate to a near-50 year low of 3.5% from 3.7% in January underlining the resilience in the labour market despite 350bp of cumulative tightening.

The strong print was driven by people who in January had committed to start a new job in February. They weren't counted as unemployed in January, so the fall in the unemployment rate reflects their entry into the workforce. The RBA views the labour market as vital in helping avoid a recession at a time when households are being squeezed by inflation above the RBA's 1-2% target, as well as rising mortgage rates.

Overnight indexed swaps have priced out the prospect of another hike this year, with a 25bp cut priced in for later this year amid the heightened uncertainty triggered by global bank concerns. Retail sales and the monthly Consumer Price Index, both released in the last week of March, will be key in determining whether the RBA pauses.

Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Robert covers RBA and RBNZ policy and the economy for MNI in Australia.

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