Australia’s job market continues to remain tight, with economists saying this puts the Reserve Bank of Australia in the difficult position of curbing inflation at the expense of job losses.
According to the Australian Bureau of Statistics (ABS), the seasonally adjusted unemployment rate remained at 4.3 per cent in March.
This came as the number of employed people rose by 18,000 and the number of unemployed fell by 4,000 last month.
KPMG chief economist Dr Brendan Rynne said the economy is operating “as tight as a drum”, adding that the big driver of macro-economic outcomes in the near term is how the RBA will respond to the oil price shock from the US-Iran conflict.
Recent reports noted that household spending has surged in March, which was mostly thanks to petrol stations and the price of putting fuel in cars and trucks.
“Recent presentations from Deputy Governor Andrew Hauser suggest the RBA is locked and loaded for another 0.25 per cent increase next month, while the markets are also anticipating further cash rate increases beyond that too,” Dr Rynne said.
“The rationale for this higher cash rate outlook relates to the fact that the economy is operating as tight as a drum, further reinforced in today’s labour market data, and any price increases being generated within the economy are likely to be passed through to final prices, pushing inflation even higher.
“Despite the dual mandate, it seems the RBA’s clear focus is now geared towards ensuring inflation returns to the mid-point of the target band, and if it comes at the expense of job losses, then it would seem that is the price the economy needs to pay to ensure inflation expectations remain anchored.”
Diving deeper into ABS numbers, the Bureau’s head of labour statistics, Sean Crick, said the unemployment rate remained steady at 4.3 per cent, whilst the participation rate fell by 0.1 percentage points to 66.8 per cent.
“Growth in employment was driven by full-time workers, which rose by 53,000 people in March. This was partly offset by a fall in part-time employment of 35,000 people,” Crick said.
Full-time employment rose for both males and females, increasing by 29,000 and 24,000, respectively.
Both the number of males and females working part-time fell this month, down 19,000 and 16,000, respectively.
There was also a lift in hours worked across the country by 0.5 per cent. Crick said people worked 9.2 million more hours in March, with full-time hours increasing by 7.1 million and part-time hours increasing by 2.1 million hours.
The 0.4 per cent rise in full-time hours worked was supported by the 0.5 per cent rise in the number of people employed full-time.
Part-time hours worked rose 0.6 per cent, despite the 0.7 per cent fall in part-time employment.
“This meant that on average, a person working part-time worked 1.4 per cent more hours in March than they did in February,” Crick said.
The trend unemployment rate was also at 4.3 per cent. Crick said both trend employment and hours worked grew by 0.2 per cent in March, and that the number of hours worked grew faster annually at 2.0 per cent compared to employment, which grew at 1.4 per cent.