Australian unemployment rate remains steady at 3.5 per cent, prompting grim May rate rise forecast
Australia unemployment rate stable with mortgages have just been lumped with more bad news. As they are trying to enjoy the first month in nearly a year where the RBA paused rates.
A red hot labour market is expected to put pressure on the Reserve Bank to hike interest rates at its next board meeting.
The unemployment rate remained steady at its near 50-year low of 3.5 per cent in March after 53,000 jobs were added to the market.
Economists had widely tipped the official jobless rate would tick up to 3.6 percent and some 20,000 jobs would be added. Indicating a cooling in the labour market.
BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the data backed expectations the RBA would lift rates again in May.
“There are very few signs of weakness in these data and little to suggest. The labour market is slackening in a meaningful way,” he said. “This affirms our expectation that the quarter one consumer price index print will be a strong one.”
The central bank put a pause on its aggressive tightening cycle in April. After raising the cash rate from 0.1 per cent to 3.6 per cent over. 11 months in a bid to tackle soaring inflation.
Fresh quarterly inflation data is set to be released later this month. In the December quarter. It jumped to 7.8 per cent over the year, the highest since the 1990s.
The RBA forecasts inflation to decline to 4.75 per cent over 2023 before easing to around 3 per cent by mid-2025.
AMP chief economist Shane Oliver said the inflation data will be key as falling job openings and the return of immigration points to “softer” job figures ahead.
“It makes more sense to stay on hold,” he said. Meanwhile, ANZ analysts “don’t think” this month’s figures will be enough for a May cash rate hike.
“…Given the RBA’s reasoning for pausing in April. To assess the impacts of the cumulative 350bp of hikes delivered so far. Given the long lags of monetary policy”. The bank said.
The near half century low in the unemployment rate suggested the labour market remained tight. Head of labour statistics at the ABS Lauren Ford said.
“With employment increasing by around 53,000 people. And the number of unemployed decreasing by 1,600 people. The unemployment rate remained at a near 50-year low of 3.5 per cent,” she said.
“In line with the increase in employment. the employment-to-population ratio increased 0.1 percentage point to 64.4 per cent. With the participation rate remaining at 66.7 per cent.
“Both indicators were close to their historical highs in November 2022. Reflecting a tight labour market and explaining. Why employers are finding it hard to fill the high number of job vacancies.”
The unemployment rate, which measures those with jobs but can’t get the extra hours they would like, lifted from 5.8 per cent in February to 6.2 per cent.
“The underemployment rate continues to be low in historic terms, being 2.5 percentage points lower than before the pandemic. This continues to be underpinned by consistently faster growth in hours worked,” Ms Ford said.
Over the past two months female employment climbed by 81,000 taking the female participation rate to a record 62.5 per cent.
Treasurer Jim Chalmers said it was “remarkable”. That Australian had a jobless rate with a three in front of it.
“With all of these challenges that we‘ve got in our economy and particularly in the global economy. That’s been a pretty remarkable outcome,” he told Nine ahead of the release.
“The first six months of the Albanese government. Was the fastest jobs growth for a new government over a six-month period I think on record.
“That’s one of the things we have going for us even if Australia unemployment rate stable unemployment. Shifts part of a percentage point in either direction. It still has been the case that that’s been a source of considerable strength.”