Daily Commentary BY THE CURVE TEAM –

Latest Employment Data Complicates Outlook

22nd of March, 2019

The latest data on the Australian employment market threw up some mixed readings, complicating the outlook for monetary policy.

Australia’s unemployment rate continue to trend lower, falling below 5% in February. The steady downtrend for the unemployment puts the RBA’s forecast of an 4.75% rate over the medium term within reach. However the finer details of the report suggest that the employment market isn’t as healthy as the unemployment rate suggests.

For months now a number of leading indicators of employment have been heading in the wrong direction. Adding to the ANZ jobs report and the employment index from the NAB survey was job vacancies, the RBA’s preferred measure,  which earlier in the week also fell.

While the unemployment rate has defied these leading indicators, employment growth slowed noticeable in February. The economy only added 4,600 jobs over the month with part time jobs up 11,900 while full time jobs were down 7,300. The only reason that the unemployment rate fell was that over 15,000 people left the work force which saw the participation rate fall 0.1%.

Despite the weakness in the underlying details within the report, the fall in the unemployment rate will be enough to give the RBA some breathing room to assess further incoming data over the months ahead.

David Flanagan

Director - Interest Rate Markets