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If Australian traders were hoping to get a strong catalyst from the ABS’s latest domestic labour data this morning with a view towards RBA rate cut forecasts, they didn’t get one.
Domestic unemployment remained basically unchanged, jumping up 0.1% in March after a stronger-than-expected labour market read in February.
The data is ultimately unlikely, on its own, to sway the RBA one way or another with a view towards hastening or prolonging interest rate cut decisions.
The ASX200 did dip slightly from 11.30am – 11.35am AEST following the release, though, not really by any meaningful degree. As at lunchtime AEST, the market remains up just over +0.40% on Thursday.
All in all, it seems the data is being viewed as a non-event. A zoomed-out look at YTD data adds weight to this assumption.
While the ABS noted that March data has returned to seasonal norms, it’s the bureau’s further-looking trend unemployment data that paints a picture of stagnancy.
For the last five months, Australian trend unemployment has remained at 3.9%.
While we’re heading closer to the 4% mark, which could prove to be a psychologically compelling datapoint for markets, the country remains in an unusually tight labour market (remembering that the ABS considers only one hour of work a week as “employment.”)
Employment fell by around 7,000 people and the number of unemployed Australians increased marginally to 21,000 – still historically low.
“The labour market remained relatively tight in March, with an employment-to-population ratio and participation rate still close to their record highs in November 2023,” ABS labour stats chief Bjorn Jarvis said.
Then there’s the consideration that seasonally adjusted monthly hours worked jumped by nearly 1%.
”The recovery in growth in hours worked over the last two months has seen the annual growth rate rise to 1.7 per cent,” Jarvis added.
“This was still weaker than the annual growth rate in employment of 2.4 per cent, but that partly reflects the very high level of hours worked a year ago.”
Oxford Economics’ head of macro Sean Langcake was also quick to point out that March labour data more or less returned to a normal read for the month.
However, he did flag that unemployment is lower than what Oxford Econ was expecting.
“The unemployment rate edged higher to 3.8%. Looking through the large gyrations in the quarter, the unemployment rate is still lower at the end of Q1 than we expected coming into 2024,” Langcake said.
“Total hours worked increased in March, which contributed to a fall in the underemployment rate.
“There was some payback for last month’s surge in jobs growth, with employment ticking down very slightly in the month.”
The next RBA decision is on May 7, with expectations for another pause widely held.
What will surely prove more influential is the next batch of Australian CPI inflation data due on Wednesday April 24 next week.
