Australia’s labour market showed unexpected resilience in March, with employment bouncing back strongly from February’s sharp decline, while unemployment remained contained at 4.1%, according to Reuters.
The data reinforces expectations that the Reserve Bank of Australia (RBA) will begin cutting interest rates as early as May, though markets remain divided on the potential scale of monetary easing.
The Australian Bureau of Statistics reported a net gain of 32,200 jobs in March, partially recovering from February’s revised 57,400 decline. While slightly below the 40,000-increase forecast by economists, the rebound suggests underlying strength in the jobs market.
Report takeaways
Unemployment edged up to 4.1% from 4.0%, but remained below the 4.2% consensus forecast. Meanwhile, participation rate climbed to 66.8% from 66.7%, indicating more Australians entering the workforce.
However, hours worked dipped 0.3% due to disruptive weather events across parts of the country. Tony Sycamore, market analyst at IG, noted:
The solid bounce back in March indicates that the Australian labour market remains more resilient than many expected, including the RBA.
Financial markets have fully priced in a 25-basis-point rate cut at the RBA’s May meeting, with swaps suggesting about a 25% chance of a more aggressive 50 basis point reduction. The central bank held rates steady at 4.1% earlier this month but signalled openness to reconsidering policy in May.
Inflation is expected to return to the RBA’s 2-3% target band in Q1 data due later this month. The RBA’s own forecasts see unemployment peaking at just 4.2% this cycle.
While the jobs recovery provides some comfort, other indicators point to slowing momentum. Retail sales have weakened amid cost-of-living pressures, and business confidence remains subdued. Housing market activity has also cooled despite population growth.
The RBA will have one more employment report and crucial Q1 inflation data before its May 19-20 policy meeting.
