Summary: Employment grows in March; employment number increase significantly larger than expected figure; “another very strong labour market report”; job losses from end of JobKeeper to be “short-lived”; participation rate hits record high; fewer people seeking work, larger available workforce sends jobless rate lower; more part-time jobs, fewer full-time jobs; aggregate work hours rise; underemployment rate below 8%;
Australia’s period of falling unemployment came to an end in early 2019 when the jobless rate hit a low of 4.9%. It then averaged around 5.2% through to March 2020, bouncing around in a range from 5.1% to 5.3%. Leading indicators such as ANZ’s Job Ads survey and NAB’s capacity utilisation estimate suggested the unemployment rate would rise in the June 2020 quarter and it did so, sharply. The jobless rate peaked in July 2020 before falling below 7% a month later. Since then, it has continued to trend lower.
The latest Labour force figures have now been released and they indicate the number of people employed in Australia according to ABS definitions increased by 70,700 in March. The rise was not quite as large as February’s 88,700 increase but it was again significantly larger than the generally expected figure of 35,000.
“Another very strong labour market report adds to the evidence that the end of JobKeeper will only be a minor, temporary setback to the recovery,” said ANZ senior economist Catherine Birch.
Longer-term domestic Treasury bond yields moved modestly higher, largely tracking overnight movements of their US Treasury bond counterparts. By the end of the day, 10-year and 20-year ACGB yield had both added 2bps to 1.73% and 2.44% respectively while the 3-year yield finished unchanged at 0.26%.
In the cash futures market, expectations of a change in the actual cash rate, currently at 0.03%, remained largely stable. At the end of the day, contract prices implied the cash rate would inch up slowly to around 0.12% by August 2022.
Birch expects any job losses from the end of JobKeeper to be short-lived and for newly unemployed people to “find a new job relatively quickly.”
Westpac economist Lochlan Halloway noted “the rest of the labour market is running with considerable momentum… and it is more likely that the unemployment rate is, at worst, flat through the next few months rather than rising.”
The participation rate hit a record high, rising from February’s 66.1% to 66.3% as the total available workforce increased by 43,600 to 13,855,700. The number of unemployed persons fell by 27,100 to 778,100; the lower unemployment number in conjunction with the increase in the number of people in the workforce led to a decline in the unemployment rate from 5.8% to 5.6%.