Australia's jobs gain slows while unemployment holds steady

[SYDNEY] Australia's economy added fewer jobs than forecast in March, while unemployment held at a 13-1/2 year low, as the labour market's powerful recovery in recent months hits an air pocket.

Employment rose by 17,900 from a month earlier, led by full-time roles, while coming in below economists' expectation of a 30,000 gain, Australian Bureau of Statistics data showed on Thursday (Apr 14). Unemployment held at 4 per cent, versus a forecast fall to 3.9 per cent, while labour market participation remained steady.

"There was a small tick down in hours worked, reflecting the impacts of flooding in New South Wales and Queensland," said Sean Langcake, head of Macroeconomic Forecasting for BIS Oxford Economics. "A steady rise in Omicron cases through the month also limited the number of hours able to be worked in the month."

The Australian dollar fell after the report and was trading at 74.51 US cents as at 11.50 am in Sydney. Three-year government bond yields slid and were trading at 2.361 per cent.

The result may disappoint Prime Minister Scott Morrison, who has sought to burnish his government's economic credentials as he bids for a come-from-behind win at Australia's May 21 ballot. Yet beyond the monthly results, the labour market has been on a steady path to improvement and the economy is growing strongly.

"From the political angle, April labour force is due the Thursday before the May 21 election so there is still scope for a 3 in front of the unemployment rate in the final days of campaigning," said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada.

Investors and economists are likely to look through the data, which tend to be volatile month-to-month and focus instead on recent reports showing an economy running hot with price pressures strengthening.

A report Tuesday showed business sentiment surged as firms passed on increasing costs to consumers, reflecting solid underlying demand. Separate data Monday from the National Skills Commission reported job vacancies hit a 13-1/2 year high, suggesting the labour market will tighten further.

Economists maintain there's sufficient evidence for the Reserve Bank to begin its rate tightening cycle with a 15-basis-point hike to 0.25 per cent in June. Money markets are pricing a 25-basis point increase that month to 0.35 per cent, with the cash rate seen at 2 per cent by year's end. BLOOMBERG