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Australia's jobs boom is showing signs of cooling after much weaker than expected employment growth in March.
Key points:
- A weak 4,900 new jobs in March held was up by part-time job growth offsetting aa loss of almost 20,000 full time positions
- February jobs numbers were revised down to a net 6,300 loss, ending a record run of employment growth at 16 months
- RBA's target of unemployment falling to 5.25pc by mid-2018 now "more than a little challenging"
The record run of unbroken jobs growth has been ruled off at 16 months after the Australian Bureau of Statistics revised down February's result from a 17,500 gain, to a loss of 6,300 jobs.
In seasonally adjusted terms, 4,900 new jobs were created in March — well down on the forecast 20,000 new jobs and the average growth rate of 35,000 new jobs a month over the past year.
Unemployment was steady at 5.5 per cent in seasonally adjusted terms, but edged up to 5.6 per cent in trend terms.
The fall in full-time jobs (-19,900) was offset by more part-time employment (+24,800).
The Australian dollar fell 0.4 per cent to 77.6 cents against the US dollar in the immediate aftermath of the data being released.
BIS Oxford Economics' Sarah Hunter said jobs growth in March looked somewhat soggy after last year's spectacular performance.
"In part this was inevitable — the economy can't sustain growth of more than 400,000 per annum — but it also highlights that the labour market has run ahead of output growth in recent months," Ms Hunter said.
"Looking ahead, the coming downturn in the labour-intensive residential construction sector will be a drag, and we expect the labour market to maintain the current modest pace of growth, and add around 15,000 jobs a month over the next year."
Average hours worked still falling, RBA unemployment forecast in doubt
Callum Pickering, the Asia-Pacific economist with global jobs site Indeed, said while the participation rate in the workforce was at a record level in trend terms, the unemployment rate was starting to trend up as well.
He said the trend to part-time work was noticeable, with the hours worked per person still sliding, despite an increase in total hours rising 2.6 per cent over the year to a record high.
RBC's Robert Thompson said the weak result was making the Reserve Bank's forecast of unemployment falling to 5.25 per cent in the next few months "more than a little challenging."
"We have long held the view the RBA will stay pat through 2018, and this gives further ammunition to that view," Mr Thompson said.
"CPI [inflation] next week is the next major indicator for markets to focus on, and at this stage is also looking unlikely to present a challenge to the on-hold outlook."
JP Morgan's Tom Kennedy said the RBA would most likely have to abandon its current forecast in its next Statement on Monetary Policy in May.
"Much of the positivity RBA officials have had on the labour market of late has come from the fact that employment growth boomed last year, with raw job creation making it easy to paper over the various headwinds facing the consumer, such as benign wages growth and high levels of household indebtedness," Mr Kennedy said.
Topics: unemployment, economic-trends, business-economics-and-finance, australia
First posted