The Australian Bureau of Statistics (ABS) has released its labour force report for March, which showed no adverse impacts from the Reserve Bank of Australia’s (RBA) monetary tightening nor the global energy shock.
The seasonally adjusted unemployment rate remained at 4.3% in March, with the number of employed people rising by 18,000, driven by a strong 53,000 increase in full-time jobs.
The participation rate also fell by 0.1 percentage points to 66.8%, which helped keep the unemployment rate steady, given that jobs grew more slowly than the working-age population.
The number of monthly hours worked also rose a solid 5% over the month.
Australia’s headline unemployment rate is now tracking in line with the RBA’s forecast, suggesting there is no explicit reason in the jobs data for the RBA to refrain from hiking rates in May.
My view remains that the RBA would be foolhardy to continue to tighten rates, given that jobs and growth are likely to be hit hard in the coming months due to fuel shortages.
I believe that the RBA will repeat the experience of the Global Financial Crisis, whereby it tightened aggressively before reversing course with deep rate cuts once the crisis broadened.
