Jobs surge past expectations but unemployment ticks up

A bumper run in jobs extended to March and more people went looking for work, official data on Thursday showed, a sign the labour market remains strong despite a small uptick in the unemployment rate.

The local dollar jumped about a quarter of a US cent to US72¢ as traders wagered the Reserve Bank of Australia (RBA) will not rush to ease rates, even though the broader economy has seemingly lost momentum.

Thursday’s data showed a total 25,700 new jobs were created in March, surging past expectations for a rise of 12,000.Credit:Tamara Voninski

The employment report is being closely watched for clues on monetary policy as the country's central bank is counting on labour market strength for a long-awaited pick-up in wage growth and inflation in the face of a property market downturn.

Thursday's data showed a total 25,700 new jobs were created in March, surging past expectations for a rise of 12,000.

Encouragingly, all of that increase was led by full-time work with part-time decreasing 22,600.

"A solid set of employment figures, dominated by full-time roles, suggests that households and businesses may have to wait a little longer for rate cuts," said Callam Pickering, APAC economist at global job site Indeed.

"From the perspective of policymakers, particularly the Reserve Bank, this will be viewed as a positive report," Mr Pickering said.

Australia is creating jobs at a brisk annual pace of 2.4 per cent, much faster than the 1.6 per cent rise in population.

Even so, the unemployment rate rose to 5 per cent in March from an eight-year trough of 4.9 per cent the previous month as the participation rate climbed to 65.7 per cent in a sign more people went looking for work.

While the jobless rate has stayed in a 4.9 to 5.1 per cent band since last September, consumer prices have remained lukewarm for years now.

Worryingly for the RBA, first-quarter data due next week is expected to show core inflation further cooled to 1.7 per cent from 1.8 per cent in the previous quarter, undershooting its 2 to 3 per cent mid-term target.

The RBA has held the cash rate at a record low of 1.5 per cent for 2½ years now and earlier this year switched away from its long-held tightening bias to a more neutral stance. On Tuesday, minutes of the central bank’s April meeting showed it believes a cut in interest rates would be appropriate if inflation stayed low and unemployment trended high.

Reuters

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