Australia: A bumper jobs gain in March - ANZ

Felicity Emmett, Senior Economist at ANZ, explains that Australian employment bounced back in March, rising a strong 61k after a soft outcome in February.

Key Quotes

“Full-time jobs continue to strengthen, reversing the weakness through much of last year. The bounce in jobs brings the official labour market data closer into line with the strength in the business surveys and ongoing moderate gains in ANZ job ads. The unemployment rate was unchanged at 5.9%.”

“After hitting a soft patch in February, employment bounced back in March to post a bumper 61k rise. The strength was concentrated in full-time jobs which rose a massive 75k (the second largest rise on record), while part-time jobs fell 14k. Growth in full-time jobs has turned around sharply over recent months: after falling by 129k in the nine months to September 2016, full-time jobs have grown by 159k over the past six months.”

“While employment grew quite strongly, the unemployment rate remained elevated at 5.9%, alongside a tick-up in the participation rate from 64.6% to 64.8%. After tracking broadly at around 5¾% for nearly a year, unemployment is now rising in trend terms. Along with still high underemployment, this suggests that there remains significant spare capacity in the labour market which is likely to continue to weigh on wage growth.”

“In terms of the states, employment growth has been strongest in Queensland over the past few months, with Victoria and Western Australia not far behind, while unemployment rates are trending lower in Tasmania, Western Australia and NT.”

“RBA implications: We think the RBA would be pleased with the strength in employment in today’s numbers, although the stubbornly high unemployment rate will remain a source of concern. With spare capacity in the labour market taking longer than expected to be worked off, and the resulting dampening impact on wages growth, we remain comfortable with our view that the RBA is likely to be on hold for an extended period.”