MNI DATA ANALYSIS: Jobs Data Suggests RBA On Hold For Longer

--Risk Tilted For Further Rise in Jobless Rate

By Sophia Rodrigues

     SYDNEY (MNI) - The number of employed persons rose in line with

expectations in April but the jobless rate rose to a nine-month high as the

number of unemployed and the participation rate rose.

     The rise in unemployment rate suggests the Reserve Bank of Australia's cash

rate is likely to remain on hold for longer than suggested by its guidance for

interest rates to rise at some point. Any further rise in the jobless rate could

potentially bring rate cut back to the table especially given the risk that

participation rate could rise.

     The labor force data for April, published by the Australian Bureau of

Statistics Thursday, showed the number of employed rose 22,600 in April, very

close to MNI median forecast for a 22,000 rise. This follows a downward revision

in March to a fall of 700 from originally reported rise of 4,900. This means

employment grew in April for the first time in three months.

     The latest rise was made up of full-time employment which offset the fall

in part-time employment.

     Despite the rise in employment, the overall numbers pose a risk for the

RBA's stance because the pace of jobs growth has slowed in recent months and the

jobless rate has risen. At 5.6%, the jobless rate was back to the level last

seen in July last year.

     More importantly, the data shows the pace of jobs growth needs to be strong

if unemployment rate has to fall from here. For example, in the last six months

the number of employed rose 152,200 at an average rate of 25,400 but the jobless

rate still rose to 5.6% from 5.4% because during this period participation rate

rose to 65.6% from 65.2%.

     Participation rate in April was slightly lower than the recent peak of

65.7% in January so that signals the risk for unemployment rate is to the

upside.

     Employment-to-participation ratio was unchanged at 61.9% in April, and has

fallen from the most recent peak of 62.1% reached in January. 

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

                                              April                        March

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

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

Employed Persons                            +22,600    -700(revised from +4,900)

                          +20,000 (range +10,000 to

MNI Consensus                              +30,000)

                                                           -25,100 (revised from

Full-time Employment                        +32,700                     -19,900)

                                                            +24,400(revised from

Part-time Employment                        -10,000                     +24,800)

Unemployment Rate                              5.6%           5.5% (no revision)

MNI Consensus             5.5% (range 5.3% to 5.6%)

Participation Rate                            65.6%          65.5% (no revision)

                         65.5% (range from 65.5% to

MNI Consensus                                65.6%)

Unemployed Persons                          +10,600         -2,400 (no revision)

Employment to

Population                                    61.9%          61.9% (no revision)

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

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