Jobs market outperforms expectations in March as rate cut hopes falter

Australia’s red hot jobs market shed 6600 jobs in March, but the result was better than expected and has cemented the view that the Reserve Bank will be in no rush to cut interest rates.

While the number of full-time positions rose by 27,900 over the month this was offset by the loss of 34,500 part-time positions, the Australian Bureau of Statistics said on Thursday, countering expectations for a modest overall increase of 10,000 jobs.

The decline in the number of Australians in work pushed the unemployment rate slightly higher to 3.8 per cent, up from 3.7 per cent in February, according to the seasonally adjusted figures.

But even as the key jobless measure inched higher, the result was lower than consensus forecasts of an increase to 3.9 per cent, as the jobs market continued to absorb Australia’s soaring international migrant intake.

As a result of the fall in employment and the pace of population growth, the employment-to-population ratio fell 0.2 percentage points to 64 per cent.

March’s unemployment reading follows a bumper result in February, where an additional 116,500 people found work, however many economists viewed the figure as volatile due to shifting seasonal patterns.

Also indicating a slight weakening in the jobs market was a decline in the participation rate – the proportion of Australia’s working age population employed or looking for a job – which edged 0.1 percentage points lower to 66.6 per cent.

Alongside measures of inflation, the jobless rate is a key consideration of the RBA board in its deliberations on interest rates, which have held steady at 4.35 per cent since November.

According to its own staff forecasts, the RBA expects the unemployment rate to increase to 4.3 per cent by year’s end, rising to 4.3 per cent by December 2025.

The RBA’s next rates decision will be announced on May 7.

More to come.