AUD: Employment robust after soft lift-off earlier – Deutsche Bank

Adam Boyton, Chief Economist at Deutsche Bank, notes that the Australian employment rose 26.1k in March after a soft end to 2015 and start to 2016.

Key Quotes

“That prior softness sees trend jobs growth (as estimated by the ABS) at 7.7k, weaker than our labour market tracker which suggests around 13k jobs growth; while a model based estimate of employment shows much weaker jobs growth in Q1-2016 than GDP or real wages growth would suggest (after the reverse in Q4-2015).

The unemployment rate fell to 5.7%; while across employment growth, hours worked, the change in the unemployment rate and the full-time / part-time split the labour force survey has been running roughly consistent with the NAB survey over the past year. That said, the collapse in hours worked in March (down 1.1% mom / up just 0.7% yoy) and the fall in full-time employment (of 8.8k) makes the March employment report weaker in the detail than the headlines.

Employment growth likely needs to average a little less than ~12.5k a month to put upward pressure on the unemployment rate. Finally, we would see these data as consistent with no change to the cash rate in May.”