Australia’s jobs boom took a break and the currency a tumble.
The economy added 4,900 roles in March, around a quarter of economists’ estimates, and February’s gain was revised to a 6,300 loss after a seasonal reassessment, the Australian Bureau of Statistics said in Sydney Thursday. Unemployment, the key metric for the central bank, held at 5.5 percent as fewer people sought work last month.
“Jobs growth has remained somewhat soggy after last year’s spectacular performance,” said Sarah Hunter, BIS Oxford Economics’ head of macroeconomics for Australia. It “highlights that the labor market has run ahead of output growth in recent months.”
The Australian dollar dropped after the employment release, trading as low as 77.64 U.S. cents from 77.96 cents before the data.
The decline was driven by full-time roles and reflects a slowdown in the first quarter after 2017’s bonanza gains. It should further damp any expectations of the Reserve Bank of Australia lifting interest rates this year. Governor Philip Lowe says he wants the labor market nearer full employment, estimated at about a 5 percent jobless rate, before he considers the first hike since 2010.
Cutting the jobless rate proved a struggle even during last year’s employment boom as a jump in female participation and high immigration expanded the labor supply. That’s partly why Australia increasingly looks a policy laggard as other developed economies prepare or begin to withdraw stimulus.
Hunter reckons the labor market will cool somewhat in months ahead as housing eases.
“The coming downturn in the labor-intensive residential construction sector will be a drag, and we expect the labor market to maintain the current modest pace of growth,” she said, adding it should be enough to absorb new entrants, but not sufficient to cut unemployment.
New South Wales, the most populous state and the epicenter of a housing boom, led the declines after losing 6,500 roles, pushing its jobless rate to 5 percent from 4.8 percent. The mining hub of Western Australia recorded the biggest jump in unemployment: to 6.9 percent from 6.1 percent.
Victoria, which has similarly enjoyed a property bonanza and is experiencing high population inflows, added the most jobs with 26,400. Its unemployment rate fell to 5.2 percent from 5.7 percent in February.
The central bank has kept rates at a record-low 1.5 percent since 2016 to encourage firms to invest and hire as services take up the growth baton from the resource industry. Traders are pricing in about a 30 percent chance of a rate rise late this year; Lowe has made clear since taking the helm in 2016 that he’s reluctant to ease further for fear of fueling asset-price gains.
“Leading indicators continued to point to above-average growth in employment in the period ahead,” the RBA said in minutes of its April policy meeting released Tuesday.
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