The Australian labour force has posted the largest job gains in four years after the unemployment rate reported a surprising – and welcomed – drop in March.
According to the latest labour force statistics released by the Australian Bureau of Statistics, the number of jobs rose by 37,700 in March after rising by a revised 41,900 in February. The unemployment rate fell from 6.2% to 6.1% over the month.
A total of over 155,000 job seekers found work over the past five months, which is the best result in four years for an equivalent period.
Savanth Sebastian, economist for CommSec says this should help ease consumer sentiment woes.
“Overall, this is an encouraging result! Employment growth surpassed even our rather optimistic expectations,” he said.
“One key positive out of the super-strong result is that it should ease concerns about the labour market. All the noise about the 12–year high unemployment rate earlier in the year dampened consumer confidence. However this time round despite the lift in the participation rate – which suggests more people are looking for work – the unemployment rate eased back to 6.1%. The latest result should help to ease some of those concerns. An improvement in confidence would certainly bode well for retail activity and broader economic growth.”
As a result, Sebastian says that while the Reserve Bank will continue its easing bias, it may have scope to hold off on further rate cuts at present.
“The Reserve Bank would certainly be feeling a bit more comfortable and justifies the decision to keep interest rates on hold earlier this month. The one concern is the recent Aussie
dollar strength,” he said.
“And while the Reserve Bank will maintain an easing bias it seems to have no need to be moving rates in any direction at present. The chance of a rate cut in May has dropped from 73% to 56% [following] the employment release.”