So will the Reserve Bank still cut rates after the surge in jobs in March, according to the latest figures from the Australian Bureau of Statistics (ABS)? The way the dollar jumped and the tone of early commentary, you be betting the odds of a rate cut next month had blown out a touch.
More than 44,000 new jobs were added last month (backing up Tuesday’s solid ANZ job ads report), with new employment split between full- and part-time work. The unemployment rate was steady at 5.2% and unemployed fell slightly and more hours were worked as well.
A rate cut had been urged by the likes of experts such as Solomon Lew (Premier Investments, Just Group), business groups, such as the Australian Chamber of Commerce and Industry (which wants a 0.5% slash), the heads of many other companies, such as Wesfarmers, tourism groups, the banks such as Westpac where CEO Gail Kelly is calling them lower, as her chief and economist Bill Evans, who has been banging on about the need for a rate cut for months.
Building approvals and home loans are slack, retail sales are weak, consumer confidence is weak (that’s from the Westpac and the Melbourne Institute survey. But the rival, weekly survey of consumer confidence from Roy Morgan rose last week.). But car sales remain solid, overseas travel is still strong, the rural sector is looking at a bullish year, mining investment is growing. Exports are moderating (two monthly trade deficits in a row), but that’s not a concern.
But the jobs machine rolls on. On Tuesday the ANZ said the number of jobs advertised on the net and metro newspapers (down to a 4% share and falling) had risen to three-year high. While reported, no one wondered if that was sending a message that the jobs market had not died, as so many people have claimed with the spate of losses in cars, retailing, banking and finance, manufacturing generally and airlines, plus the media.
In fact the number of new jobs advertised, as measured by the ANZ, is up a very strong 12% so far in 2012.
The spate of job loss reports saw quite a few market estimates for job losses of 5000 to 15,000 (some saw a small rise) and a rise in the unemployment rate to 5.3%. So this morning’s report from the ABS of a steady unemployment rate of 5.2%, came as some of a shock (for the second month in the last three).
The ABS said the number of people employed increased by 44,000 to 11.491 million last month.
The rise in employment was driven by increased full-time employment, up 15,800 people to 8,080 million and an increase of 28,200 in part time workers to 3.419 million. The increase in full-time jobs was the biggest so far this year.
“The increase in employment was driven by an increase in both male and female full-time and part-time employment,” the ABS commented.
The number of people unemployed fell (yes, fell) by 3200 to 629,100 in March, while aggregate hours worked rose 9.5 million to 1,624.2 million hours. And, there was an increase in the labour force participation rate of 0.2 percentage points in March to 65.4%.
Given the string of profit downgrades from companies, comments from their CEOs and various industry groups, and unions with a lot of self interest, the March jobs report is a little unreal in that it is showing an economy that is stronger than everyone thinks.
So, should the RBA (which has signalled a rate cut if the March quarter inflation data is benign), cut rates once on May 1 to shut everyone up and go back to managing an economy that is still as puzzling as it has been for years?
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