Unemployment at highest level since 2009
It rose to 5.6 per cent in March, the highest in 3½ years, with the economy losing 36,100 positions, reversing about half the gain of the previous month.
Full-time jobs fell 7400 and part-time jobs 28,700, Bureau of Statistics data released on Thursday showed. The participation rate fell 20 basis points to 65.1 per cent in March.
"This means that the RBA is not going to ditch its easing bias any time soon," said ANZ's head of Australian economics, Justin Fabo. "But equally, though, it's certainly not enough to make them pull the trigger for further cuts in coming months, because they have been expecting the unemployment rate to drift a little higher."
Victoria and Queensland recorded the largest falls, losing 9300 and 7400 jobs respectively. Tasmania's jobless rate jumped to 7.3 per cent from 6.6 per cent.
The dollar dropped half a cent after the figures were released, but recovered to hover at US105.2¢.
Analysts said looking beyond the volatility of the seasonally adjusted monthly figures, the trend estimates showed the jobless rate slowly rising. "There is a clear upward trend in the unemployment rate now, and that suggests the economy is growing below its average pace," said Brian Redican at Macquarie Securities.
"If you look at business surveys, hiring intentions are very weak. The [Bureau of Statistics] survey of job vacancies is falling at quite a rapid pace and is at a low level, so there doesn't seem to be the circuit-breakers to turn this around any time soon."
The number of jobs created, which is growing at about 12,600 a month in trend terms, was failing to keep pace with the strong growth in population, analysts said. The labour force is growing at about 25,000 a month.
Although the rise in unemployment raised the prospect of a cut to the cash rate, market expectations remain low. Markets were pricing in a 24 per cent chance of a cut next month. They were forecasting at least one 25-basis-points cut for the rest of the year.
Frequently Asked Questions about this Article…
Australia's unemployment rate rose to 5.6% in March — the article reports this as the highest reading in the period noted — driven by a net loss of jobs for the month.
The economy lost 36,100 positions in March, reversing about half of the previous month's gain. Full‑time employment fell by 7,400 jobs while part‑time employment fell by 28,700.
Yes — the participation rate fell 20 basis points to 65.1% in March. A lower participation rate can mask weakness in the labour market because fewer people are actively looking for work, which is important for investors watching economic momentum and policy settings.
Economists expect the Reserve Bank of Australia to keep interest rates on hold next month. ANZ's Justin Fabo said the RBA isn’t likely to abandon its easing bias, but the jobs rise isn’t seen as enough to trigger imminent cuts. Markets were pricing about a 24% chance of a cut next month and forecast at least one 25‑basis‑point cut later in the year.
Analysts noted hiring intentions are very weak. The Bureau of Statistics' survey of job vacancies is falling rapidly and is at a low level, suggesting there may not be immediate triggers to turn the jobs trend around.
In trend terms, jobs are being created at about 12,600 a month, while the labour force is growing at roughly 25,000 a month. That shortfall helps explain the slowly rising unemployment rate highlighted in the article.
The Australian dollar initially dropped about half a cent after the figures were released, but then recovered to hover at around US105.2¢, according to the article.
Investors should monitor upcoming RBA commentary and policy decisions, future monthly jobs releases (to see if the upward unemployment trend continues), business hiring surveys and job‑vacancy data, and market expectations for rate cuts — all of which the article highlights as key signals for economic momentum and asset markets.
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