The national unemployment rate climbed in March – and might go even higher in coming months, despite strong full-time employment growth.
Employment rose by 25,700 people through March, driven by full-time jobs growing by 48,300.
However, that was partly offset by a fall of 22,600 people in part-time employment.
That led the national unemployment rate to jump up 0.1 percentage point to 5 per cent, despite a workforce participation rate that Indeed APAC economist Callam Pickering noted has “rarely been higher” than it was last month.
“From the perspective of policymakers, particularly the Reserve Bank, this will be viewed as a positive report,” Mr Pickering said.
“But we also cannot ignore that these labour market indicators lag economic growth. Growth slowed rapidly over the second half of 2018 and may not yet be reflected in these employment figures.”
Consequently, Mr Pickering said it wouldn’t be surprising to see employment growth slow in the next six months.
“It is likely that employment growth will begin to moderate over the remainder of 2019 and this will also hit full-time employment,” he said.
“Economic conditions appear to be softening in Sydney and Melbourne and those two cities have been the key contributors to strong employment growth. With house prices falling quite rapidly in both cities – potentially impacting construction, real estate, finance and retail employment – it would be remarkable if this didn’t hit employment growth to some degree.”
BIS Oxford Economics’ Sarah Hunter said backed up that view. She said the figures, which were in line with consensus expectations, highlighted a “fundamentally healthy” jobs market that would ease pressure on the Reserve Bank to cut the cash rate from an already-record low of 1.5 per cent
“The minutes from the board’s April meeting confirmed that they are squarely focused on the health of the labour market as the key measure of activity in the economy,” Ms Hunter said.
“The board also noted that they need to see inflation making steady progress towards the 2 to 3 per cent – the reading for core inflation in next week’s inflation data will be crucial in informing their view on this”.
NAB’s markets research team forecasts a first rate cut for 2019 as early as July, but it said there remained potential for an earlier move.
“[However], action would require more evidence of a weaker labour market, such as a large rise in unemployment or a material deterioration in the leading indicators of employment, and/or a more marked undershooting of the inflation target,” the bank said.
Queensland reported the greatest increase in overall employment, up 10,400 people, followed by Victoria with a 10,000-person rise.
NSW fell the furthest, down 2600 people, followed by Tasmania, down 1800.
Youth unemployment – people aged 15-24 – rose from 11.1 per cent to 11.7 per cent, or 259,100 people in total.
The Australian dollar jumped after the data’s release, from 71.64 to 71.87 US cents by 11.35am, but local stocks responded less enthusiastically.
“Local shares have given up early gains on Thursday at lunch. Better than expected jobs growth in March has easily beaten the consensus expectation with 25,700 jobs created vs estimates of 15,000 jobs added,” the Commonwealth Bank’s stock broking arm CommSec said at midday on Thursday.
“The ASX 200 was higher by 25 points at its best levels but is now five points higher at 6261. The index is still looking to finish the holiday shortened week on a high with a small gain.”