Daily Commentary BY THE CURVE TEAM –

Employment Steady Ahead of CPI

April 23, 2019

One of the two key pieces of data that will dictate the outlook for monetary policy remained steady last month. This week we get the other key piece of data.

The latest employment data remained steady in March with another month of reasonable jobs growth. Total employment grew by 25,700 over the month which was well ahead of estimates. The unemployment rate edged back up to 5% after yet another rise in the participation rate. 

While the unemployment rate did rise back up to 5%, it is simply sitting right in the middle of the 0.16% range that is has been oscillating within over the past 6 month. 

Despite strong jobs growth, the solid jobs market is drawing more people back into the labour force which is why we aren’t seeing the unemployment rate fall or wage pressures build. The RBA still hopes that eventually the jobs growth will eat into and absorb all the extra participants, or slack in the labour force, eventually resulting in stronger wages growth.

The focus now shifts to the other key piece of data for the outlook for monetary policy. Inflation data for Q1 is out this week and early indications are that the number could be on the softer side. While the RBA has focused on employment outcomes as the key to their outlook, they have also said that if inflation doesn’t look like it is heading back towards the target band then they might need to act. 

David Flanagan

Director - Interest Rate Markets

Daily Commentary BY THE CURVE TEAM –

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David Flanagan

Director - Interest Rate Markets