Australian Economy

Australia’s March unemployment rate steady at record low 4%, despite expectations of fall | Australian economy

Australia’s jobless rate remained steadily near its lowest level in almost half a century, with youth unemployment and underemployment levels continuing their recent declines.

The economy added more than 20,000 full-time positions in March while shedding fewer than 3000 part-time jobs, leaving the unemployment rate unchanged at a seasonally adjusted 4.0%, according to the Australian Bureau of Statistics.

“4.0% is the lowest the unemployment rate has been in the monthly survey,” Bjorn Jarvis, head of labour statistics at the ABS, said.

Apart from February and March this year, the only other months of 4% unemployment since monthly jobs figures have been released came in February and August 2008.

“The unemployment rate for women fell from 3.8% to 3.7%, the lowest it has been since May 1974,” Jarvis said. “It remained at 4.2% for men, its second-lowest level since November 2008, and just above the rate from December 2021 of 4.1%.”

The seasonally adjusted number of hours worked fell by 10m from February, to 1.803bn hours last month.

Thursday’s labour forces figures are likely to be watched closely in the federal election campaign, not least following opposition leader Anthony Albanese’s Monday stumble when asked to state the jobless rate.

The Reserve Bank will also be watching, as economists tip interest rates will rise soon – most likely from June onwards. On Thursday, the ANZ and Westpac banks became the latest to raise some of their mortgage rates.

Overall employment numbers continue to recover from Covid disruptions, with 13,389,900 people now in work, almost 400,000 more than during the worst of the downturn in early 2020.

The participation rate remained unchanged from February at 66.4%.

Youth employment, covering those aged between 15 and 24, increased by 36,000 last month, shaving another percentage point off the youth jobless rate to 8.3%.

Those in jobs continued to increase to near highs, and are now almost 400,000 (or 3%) more than at the depths of the Covid pandemic disruptions in March 2020, the ABS said.

— Peter Hannam (@p_hannam) April 14, 2022

“While young people were particularly impacted early in the pandemic and during the Delta period, we have continued to see strong increases in youth employment over the past year,” Jarvis said. The ratio of young people employed to the population was now at its highest level since August 2008, he said.

The underemployment rate also decreased by 0.2 percentage points, to 6.3%.

Westpac was the only major bank to predict the 4% jobless rate, with the other three forecasting it would drop to 3.8-3.9%. The market consensus rate was 3.9%.

Technically, the March figure is the lowest since the 1970s, coming in at 3.9542384%, the ABS said. That’s lower than the 3.981% recorded in February 2008.

Economists viewed Thursday’s jobs figures as slightly softer than expected, with a lower jobless rate still to come.

“[W]e expect the unemployment rate to only grind marginally lower from here on, hitting 3.8% by mid‑year and broadly hovering there,” the CBA said in a note.

“That reflects the economy firmly at the NAIRU [non‑accelerating inflation rate of unemployment], which the RBA estimates to be in the low fours to high threes.”

The bank said demand for labour “remains very high, with job vacancies at record highs”, adding that some of this demand would be met “by the continued pick‑up in long‑term and short‑term migration”.

ANZ economist Catherine Birch said her bank expects unemployment “to fall firmly into the threes imminently”. Her bank forecast a rate of “3.3% by the end of 2022”.

“ANZ job ads lifted 0.4% in March and according to the ABS, there were 423,000 job vacancies in February,” Birch said in a note.

“We think the RBA will wait until June before lifting the cash rate, and today’s data won’t influence the RBA either way. But a big upward surprise in [the first quarter consumer price index] could put May on the table.”

The consumer price index for the March quarter is scheduled for 27 April.

Cassandra Goldie, chief executive of the Australian Council of Social Service, emphasised the need to “stay the course on pursuing a historic opportunity of full employment”. She highlighted the risk that income aid for those battling to get by might be wound back before they found steady employment.

“We’re at a very sensitive tipping point,” Goldie said. “We’ve got to learn the lessons [of] the global financial crisis, where after the stimulus package, a succession of budgets just cut away at income support.” Goldie said these cuts had led to years of sluggish economic growth.

Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said that low unemployment numbers “coincided with the most severe workforce shortages in 48 years, alongside the highest job vacancy rates since records began”.

He warned that if shortages were not addressed, “businesses who are already stretched with an ultra-tight labour market will be pushed to breaking point”.

“The next federal government must pull all the levers it can to address chronic skills shortages,” McKellar said. “A commitment to consistent and long-term funding of vocational education and training is essential to rebuilding our local skills base.”

Echoing the CBA, he added that “increasing the target for permanent skilled migration intake up to 200,000 for at least the next two years [would] be critical”.

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