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The latest Labour Force figures released by the Australian Bureau of Statistics (ABS) have shown the seasonally adjusted unemployment rate increased to 4.1 per cent in March, slightly above the previous month’s figure of 4 per cent.
Australia’s unemployment rate has sat in the narrow range of 3.9–4.1 per cent over the last 12 months.
The number of employed people grew by 308,000 (up by 2.2 per cent) over the last year, with the annual growth rate sitting slightly higher than the 20-year pre-pandemic average of 2 per cent.
Sean Crick, ABS head of labour statistics, said: “With employment increasing by 32,000 people and the number of unemployed increasing by 3,000 people, the unemployment rate rose slightly to 4.1 per cent for March.
“The employment-to-population ratio remained at 64.1 per cent in March, while the participation rate increased slightly to 66.8 per cent.”
Despite the monthly growth in employment, the monthly hours decreased by 0.3 per cent, down for the second consecutive month.
Crick said: “A higher than usual number of people reported working reduced hours this month due to bad weather, coinciding with ex-Tropical Cyclone Alfred and other major weather events in New South Wales and Queensland.”
Ben Thompson, CEO at Employment Hero, said: “This month’s data shows a labour market that’s stable on the surface, but evolving beneath.
“Employers are still leaning into casual hiring and younger talent as they seek flexibility.
“While inflation has been easing in recent months, the ASX was taken on a ride in recent days, and we could see this more directly impact Australian businesses in the months ahead – especially for trade-exposed sectors and those reliant on global supply chains.
“Employers may adopt an even more cautious stance on hiring and wage increases as cost pressures mount.”
Head of APAC macro strategy at State Street Markets, Dwyfor Evans, said the combination of a low unemployment rate and a tight labour market “signals a lower commitment from the Reserve Bank towards further monetary accommodation and underpins what remains a relatively strong labour force”.
“Headwinds are on the horizon centred on the trade impact and weaker growth prospects, but labour market data remains solid for now,” Evans said.
Krishna Bhimavarapu, APAC economist at State Street Global Advisors, further said that Australia’s labour market “remains a blessing in disguise” in the midst of an escalating trade war.
“However, a slower growth in China may impact Australia eventually if the conflict could be long drawn,” Bhimavarapu said.
“Considering all this with the fact that inflation is in the RBA’s target range, it is ideal for the [central bank] to deliver rate cuts to further safeguard Australia’s economy. We see the cash rate declining to 3.10 per cent by December.”
Economist at Indeed, Callam Pickering, said another rate cut in May is “all but certain” in the wake of financial market carnage, higher levels of economic uncertainty, and weaker economic outlooks.
“Soft employment growth over the past few months will only give the RBA board more confidence that this is the right path to take,” Pickering said.
“While acknowledging that the Trump administration is nothing if not unpredictable, the global economic environment has shifted in such a fashion that I now expect the RBA to deliver rate cuts in each of their next three meetings, with a possibility that they deliver a super-sized cut in May.”
[RELATED: May meeting an ‘opportune time’ for RBA to revisit policy]
