Australia’s employment figures showed a robust recovery in March following a steep decline the previous month. The unemployment rate also came in slightly lower than anticipated, suggesting a resilient labor market that may not stand in the way of potential monetary easing by the Reserve Bank of Australia (RBA).
Market expectations are leaning towards a quarter-point rate cut being fully priced in for the RBA’s May meeting, with a 25% chance of a more aggressive half-point reduction. These expectations are exacerbated by fears of a global recession, potentially triggered by U.S. tariff actions.
According to the latest data from the Australian Bureau of Statistics, net employment increased by 32,200 in March after a revised drop of 57,400 in February. While this was slightly below market predictions of a 40,000 increase, the overall tone remains positive.
The unemployment rate ticked up slightly to 4.1% from 4%, yet it was still beneath the forecast of 4.2% and consistent with its range over the past year.
The RBA, anticipating unemployment to peak at 4.2% in this cycle, had not foreseen further softening in the labor market. Tony Sycamore from IG noted, The March rebound shows a stronger Australian labor market than expected, providing more resilience despite global uncertainties.
The RBA recently kept interest rates steady at 4.1%, but signaled that the upcoming May meeting could be pivotal for revisiting policy amidst labor market volatility.
The central bank will have access to key economic indicators, including the quarterly inflation report and another jobs report, before their next policy review. The inflation report is projected to bring the trimmed mean measure back within the preferred 2-3% target range.
The March employment details revealed a slight 0.3% decline in hours worked due to adverse weather conditions, while the participation rate edged up to 66.8% from 66.7%.
