Global headwinds stirred by “erratic” US policy decisions could still hit the Australian jobs market despite latest figures showing only a small uptick in unemployment.

About 30,000 jobs were created in March after a shock 53,000 slump in February, pushing the jobless rate up slightly to 4.1 per cent.

The figure came in under consensus expectations of nearly 40,000 new jobs.

“With employment increasing by 32,000 people and the number of unemployed increasing by 3000 people, the unemployment rate rose slightly to 4.1 per cent for March,” ABS head of labour statistics Sean Crick said.

The employment-to-population ratio remained at 64.2 per cent while underemployment was steady at 5.9 per cent, 0.6 percentage points lower than March 2024, and 2.8 percentage points down from March 2020.

The labour market was in a good position but there were clouds on the horizon, Oxford Economics Australia macroeconomic forecaster Sean Langcake said.

“The enormous economic uncertainty generated by erratic changes to US trade policy will weigh heavily on firms’ investment and hiring decisions,” he said.

“Employment growth will slow and now we expect the unemployment rate will climb a little higher over 2025.”

The participation rate decreased to 66.9 per cent in March but remained historically high, just 0.5 per cent below its record.

Monthly hours worked fell 0.3 per cent, dropping for the second month in a row despite the uptick in employment, due in part to extreme weather events including ex-tropical cyclone Alfred.

The employment rebound after February’s slump showed Australia’s jobs market was more resilient than many expected, including officials at the Reserve Bank, IG Markets analyst Tony Sycamore said.

The unemployment rate was well below the RBA’s forecast 4.4 per cent for June, which could stir inflation worries at the central bank.

“Nonetheless, given the downside risks to global growth and softer near-term inflation profile, we expect the RBA to look through today’s jobs data and cut rates by 25 basis points at its meetings in May and in July,” Mr Sycamore said.

With two weeks until quarterly inflation figures are released, VanEck’s head of investments and capital markets Russel Chesler backed expectations of a May rate cut but said calls for three more in 2025 could be overblown.

“The continued resilience in Australia’s jobs market over the last three years, despite the steep rate hikes, along with continued growth in retail trade and property prices demonstrates … there is little urgency for the RBA to accelerate its rate cut timelines,” he said.

CoredLogic data showed Australian property values lifted 0.4 per cent to new heights in March and retail sales have also been relatively strong, up by 0.2 per cent in February and 4.1 per cent higher year-on-year.

But the expectations of more rate cuts depended on a presumption US tariffs would be particularly damaging to Australia’s economy, Mr Chesler said.

“No one knows what the final tariffs will be nor the impact, in our view a more realistic rate cut scenario for Australia would be two or maybe three cuts this year,” he said.

The ABS will release its all-important quarterly inflation data on April 30, before the RBA’s next rate decision on May 20.

 

Adrian Black
(Australian Associated Press)