Finance Finance News Jobless rate tipped to hit 6.1%

Jobless rate tipped to hit 6.1%

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The unemployment rate is expected to have hit a near 11 year high in March, but there are signs the employment market is starting to improve.

Official labour force figures to be released on Thursday are expected to show the number of people with jobs fell by 5,000 in March, an AAP survey of 11 economists shows, after a surprise rise of 47,300 in February.

The unemployment rate is forecast to rise to 6.1 per cent, its highest level since July 2003, up from 6.0 per cent in January and February.

Reserve Bank of Australia governor Glenn Stevens has recently said he expects the unemployment rate to peak a little above six per cent in 2014, then fall back.

National Australia Bank senior economist Spiros Papadopoulos is expecting a fall of 10,000 in total employment in March after the surprisingly strong growth in February.

“The unemployment rate went up to within a hare’s breath of rounding to 6.1 per cent in February,” he said.

“In March, we see the unemployment rate rising to 6.2 per cent if the participation rate remains steady at 64.8 per cent.

“Job ads were flat in January and rose 5.1 per cent in February, but we’d need to see another rise to provide confirmation that labour demand has stabilised.”

However, Commonwealth Bank chief economist Michael Blythe expects the unemployment rate to stay at six per cent.

“The general consensus was that jobs growth would remain short of the 18,000 per month required to stabilise unemployment,” he said.

“This consensus was challenged by the February job numbers that surprised on the high side.

“Monetary policy decisions reflect more than just the job numbers.

“But another surprise in March would add to the view that the economy is turning, and add support to those in the cash rate rise camp.”

Employment growth typically lags behind rises in economic growth, which the RBA forecasts will soon pick up and get above three per cent.

Mr Blythe said leading employment indicators show that jobs growth is going to get stronger in the coming months.

Job vacancies have bottomed out and average hours worked has been steadily getting higher, which is usually followed by more hiring.

“Some of the survey related measures have been sending particularly bullish signals,” Mr Blythe said.

“Readings from the ANZ job vacancy measure, for example, are consistent with a peak in the unemployment rate.

“A literal read of the NAB business survey would have analysts forecasting jobs growth running at around 18,000 per month.”