It looks like a lot of economists need to brush up on their forecasting skills… because their consensus prediction of a modest 6,400 increase in jobs in Australia was waaaaaaaay off!
The actual results came in almost 7 times above expectations as March posted an increase of 44,000 jobs to fully erase the 15,400 jobs that were lost in February. As a result, the unemployment rate held its ground at 5.2% instead of rising to 5.3% as many had anticipated.
Needless to say, this came as a total shock to the markets, as earlier reports had many believing we would see massive job losses, especially in Australia’s manufacturing industry. Companies were said to have cut back on hiring last month due to global economic uncertainty. But as it turns out, this couldn’t have been further from the truth!
Full-time jobs grew by 15,800 or 0.2% in March, which happens to be the biggest monthly increase this year. Meanwhile, part-time jobs saw a much larger nominal increase as it surged by 28,200, or 0.8%. Aww yeah, time to put another shrimp on the barbie!
Truth be told, we might have even seen the unemployment rate slide down a notch or two if not for the fact that more people joined the work force and began job-hunting last month. According to the Australian Bureau of Statistics, the participation rate, which measures the number of working-age individuals in the work force, climbed two ticks up from 65.2% to 65.4% in March.
What this basically means is that more of our friends in the Land Down Under were feeling confident enough to actually look for work, which is quite the opposite of what we saw in the U.S. last month.
Meanwhile, the number of hours worked increase by 0.6% in March, which is a decent improvement, though not quite as remarkable as the 1.1% uptick that we saw in February.
So will the impressive jobs report be enough to keep the Reserve Bank of Australia (RBA) from cutting interest rates? Remember that RBA Governor Glenn Stevens remarked last week that he may announce a rate cut in the bank’s upcoming monetary policy decision on May 1.
Some analysts think so! Heck, the actual figure did come in almost 7 times the consensus, right?? These giddy market junkies point out that the rally on AUD/USD from 1.0306 to 1.0385 following the release of the report reminded investors that a rate cut still isn’t set in stone.
However, there are economic gurus who warn against being too optimistic about the RBA extending its pause in rate cuts to four months. They say that the Australian labor market is still far from being in tip-top shape. In fact, these naysayers think that employment is merely going sideways as the recent reports only reflect the mining industry paring the jobs lost in the manufacturing sector since the 2008 financial crisis.
Despite the differing views though, it seems like both sides agree that the inflation report for March (due on April 24) will weigh heavily on the RBA’s interest rate decision. So, in this not-so-old man’s humble opinion, it would be better if we keep ourselves from getting too excited until then.