WEEKLY E-MAIL

22 April 2024

MARCH UNEMPLOYMENT RATE RISES TO 3.8%

By Karen Maher

The latest employment figures from the Australian Bureau of Statistics show that the seasonally adjusted unemployment rate rose from 3.7% to 3.8% in March. This increase was due to a decrease in employment by 7,000 people and an increase in unemployed people by 21,000.

The slight decrease in employment came after a higher-than-normal inflow of individuals entering employment in February (118,000), preceded by below-average flows in December and January. By March, the flow into employment had returned to a more usual pattern.

The fall in employment and the pace of population growth caused the participation rate (the proportion of the population aged over 15 years in work or actively looking for it) to drop slightly from 66.7% to 66.6%.

The results indicate the labour market remains tight, with the employment-to-population ratio and participation rate remaining near record levels. While job vacancies have declined recently, they are still significantly above where they were prior to COVID, suggesting ongoing labour shortages.

While a strong labour market is good for the economy (and the people with jobs), it could pose a challenge to bringing inflation back down to the RBA’s target mid-point of 2.5% (domestic inflation is currently running at 3.4%).

However, many economists still expect a gradual easing in the strength of the labour market as higher interest rates continue to flow through the economy.

At the start of this year, markets were expecting the RBA would cut interest rates two or three times before Christmas, but given inflation isn’t coming down quickly enough and the jobs market is still very strong, most forecasters now expect the first rate cut to come late this year or even next year.

Quarterly CPI figures, released on 24 April and retail sales data for March, released on 30 April, will likely be more influential for the RBA’s direction given that the job market still appears firm.

Karen Maher
Associate

If you have any questions or comments, please email me at karen@gfmwealth.com.au

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