As RBA governor Philip Lowe said recently, March was a weird month for Australia’s job market. The unemployment rate ticked up to 4.1%, compared to the market consensus for 4.2%. Today, the Australian Bureau of Statistics (ABS) released official data. It continues to tell a rosy story about our nation’s employment landscape. Released in April, March’s employment change showed an increase of 32,200 jobs. Upward revisions to prior figures revealed a larger drop in employment last month than we reported at first blush.
That said, the employment situation was booming in March. February’s numbers suffered a blow as they were revised down from an expected loss of 52,800 jobs to a bigger loss of 57,500. The Blue Chip consensus employment change forecast for March called for an increase of 40,000 jobs. This illustrates that as much as we created new jobs, we unfortunately underperformed in ways that matter. Temporary help employment, a leading indicator of employment trends, fell by 26,000. That much-awaited growth is a stark reversal from the prior month when full-time jobs cratered by 43,800.
Employment Trends and Revisions
March’s performance of the Australian job market is thus a mixed bag. Though a positive gain of 32,200 jobs represents a recovery stage, that includes the setback of a negative but revised loss of February’s -9,000 jobs. Additionally, the downward adjustment from -52,800 to -57,500 further fuels uncertainty over the stability and resilience of the job market.
Analysts were expecting a stronger showing considering the consensus forecast called for the creation of 40,000 new jobs. While March did see positive net new job creation, the data still points to employers being skittish in the face of mounting recessionary pressures. It’s hard to fully explain this caution, but perhaps it’s tied to a number of headwinds impacting business confidence and hiring policy.
In March, the increase had been 15,000. This new increase is a cause for optimism, bringing some good news in an otherwise decimated job market. This figure is in sharp contrast to the month prior when full-time employment had its largest loss in nearly 11 years. The overall employment trend indicates an economy grappling with various challenges while attempting to recover from previous downturns.
Unemployment Rate and Market Reactions
The increase in the unemployment rate to 4.1% has left many economists and market analysts scratching their heads. This figure represents a modest uptick from February’s revised rate of 4.0%. When you consider the job gains, one would assume that all is well and good on the employment front. The market had expected the unemployment rate to remain flat at 4.2%, so the increase was a surprise.
And as this employment data rolled out, all of the financial markets responded sharply. The AUD/USD pair was 0.23% lower on the day, indicating the risk-off investor sentiment in the face of mixed economic signals. So at the lowest point that currency pair got to was 0.6355. Traders are understandably cautious as they consider the wider economic ramifications of the jobs data.
The simultaneous rise of both unemployment rates and job openings creates a confounding dilemma for both policymakers and economists. We’re seeing strong nonfarm job creation, but that is unlikely to be sufficient to absorb all the new people who are going to look for work. This might indicate structural transformations in the labor market.
Broader Economic Context
You can’t look at the Australian employment data in a vacuum. It’s more closely tied to larger global economic trends that affect local communities’ markets. Lingering tariff uncertainties and the rising stakes in the US-China trade war add even more pressure on economic stability. As economic or geopolitical stability erodes, they create demand for safe-haven assets such as gold (XAU/USD). As fears of a global recession rise, investors are flooding into gold.
Moreover, expectations for tougher easing measures from the U.S. Federal Reserve add fuel to the volatility fire. Traders are hungry to place bets on any moves from the Fed’s current stance on monetary policy. This expectation has an immediate effect on currency markets and shifts investment strategies.
This combination of domestic employment figures and pressing international economic developments makes for a tough environment for Aussie businesses and decision-makers. As challenges persist, stakeholders must navigate these uncertainties while striving for sustainable growth and stability.