MNI DATA ANALYSIS: Australia Jobs Slow But Jobless Rate Unch

By Sophia Rodrigues

     SYDNEY (MNI) - Australia broke its record pace of growth in employed

numbers in February following a seasonal re-analysis of the labor force data but

the unemployment rate remained unchanged at 5.5% for the third month in a row.

     The labor force data for March, published Thursday, showed a softening in

the pace of jobs growth  with fall in participation rate and

employment-to-population rate also indicating the labor market may be cooling

slightly. But this follows a strong labor market last year and the easing is in

line with the Reserve Bank of Australia's expectation.

     Overall, the data remains supportive of the RBA's monetary policy guidance

for the next move in the cash rate to be higher and market can still price

possibility of a rate hike by the end of the year.

     Data published by the Australian Bureau of Statistics Thursday showed the

number of employed persons rose 4,900 in March, falling well short of MNI median

forecast for +22,000. There was a downward revision in February number to -6,300

from originally reported +17,500. The revision follows annual seasonal

re-analysis of the labor force data which resulted in upward revision to January

numbers, and led to slight upward jump for the four-month period to February to

+130,700 from +129,000.

     The downward revision in February, however, resulted in a stalling in the

record run of employment growth which until January totalled 16 months.

     In the current month, the entire growth was in part-time employment which

offset the fall in full-time employment. Employment-to-participation ratio fell

to 61.9% and was down from a recent high of 62.1% in January. Still, monthly

hours worked rose 4.5 million hours to 1,740 million.

     Labor participation rate eased to 65.5%, also down from recent high of

65.7% seen in both December and January.

     In the past year, the economy has added 367,000 jobs at a monthly rate of

around 30,500 with full-time contributing 18,900 and part-time contributing

11,600 to the monthly rate.

     However, in the four months of this year, the pace of employment has slowed

to a total of 36,000 at an average rate of 9,000.

     Still the data remains within the RBA's expectation. But if the pace of

jobs growth continues to slow and pushes up the jobless rate, then it would mean

spare capacity in the economy is increasing instead of decreasing and would

delay the timing of the first hike in the RBA's cash rate.

     Note that in the February Statement on Monetary Policy, the RBA said, "It

is unclear whether participation rates will increase further and, if so, by how

much; this represents an uncertainty around the question of how spare capacity

in the labour market is likely to evolve."

     Below are key details of the labor force data for March:

                                              March                     February

--------------------------------------------------------------------------------

                         (M/M, seasonally adjusted)   (M/M, seasonally adjusted)

                                                             -6,300(revised from

Employed Persons                             +4,900                     +17,500)

                          +22,000 (range +10,000 to

MNI Consensus                              +30,000)

                                                           +20,100 (revised from

Full-time Employment                        -19,900                     +64,900)

                                                            -26,300(revised from

Part-time Employment                        +24,800                     -47,400)

Unemployment Rate                              5.5%     5.5% (revised from 5.6%)

MNI Consensus             5.5% (range 5.4% to 5.6%)

Participation Rate                            65.5%   65.6% (revised from 65.7%)

                         65.7% (range from 65.6% to

MNI Consensus                                65.7%)

                                                            +7,900 (revised from

Unemployed Persons                           -2,400                      +8,900)

Employment to

Population                                    61.9%          62.0% (no revision)

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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