Strangely there will be something close to a sense of relief among economists, analysts, those in the Federal Treasury, Government and at the Reserve Bank at today’s news that unemployment has reached 5.7%

The relief will be that the long-forecast surge in unemployment has finally hit in the current slowdown. The waiting is over.

The 34,700 rise in unemployment for March it was the biggest monthly rise in 18 years, which will concentrate minds among policymakers and make the 2010 federal budget that much tougher to frame.

The jobless rate has lagged (as it does) the slide in the economy. Even yesterday we saw a sharp rise in consumer confidence in early April after the job losses of March. Some commentators were still wondering this morning if we’d get through the slump in better shape than previously thought.

The answer is no, we haven’t and no, we won’t. The impact on employment is going to tough for everyone to ignore. The unemployment rate hit a near six year high of 5.7% last month, the highest since 2003.

March Labour Force figures released this morning by the Australian Bureau of Statistics revealed that 34,700 jobs were lost last month and the unemployment rate hit a five year high of 5.7%, up 0.5% from February’s 5.2%.

The fall was driven by the loss of nearly 39,000 full time jobs, and only partly offset by a rise of 4,200 part time jobs. It was the second successive month where there was a big loss in full time employment.

Unemployment jumped 52,900 in the month to 650,900, which in turn was up more than 44% on March 2008’s figure of 451,000. More than half that increase of 199,000 in the past 12 months has come since January of this year with around 103,000 extra people joining the ranks of the unemployed.

The market had been looking for a rise in the unemployment rate to 5.4% and the loss of 25,000 jobs, so the outcome was much worse than expected.

In NSW, the unemployed rate jumped sharply, from 5.9% to 6.9% and is on the verge of passing the 7% rate expected for the country in the old forecasts from the Federal Government.

The ABS said the number of people looking for full-time work increased by 28,500 to 460,400 and the number of persons looking for part-time work increased by 24,300 to 190,500.

“The unemployment rate increased by 0.5 percentage points to 5.7%. The male unemployment rate increased by 0.5 percentage points to 5.7%, and the female unemployment rate increased by 0.4 percentage points to 5.7%, ” the ABS said.

After months of not showing much in the way of reaction to the slowing economy, the labour force has started shrinking as the toll of jobless became too much.

The sharp rise for March makes it all but certain that our jobless rate will head closer to 8%, and perhaps further. In fact the unemployment rate could quite easily rise past 6% this month if we get a repeat of the March performance and more than 30,000 jobs lost.

This will not change the RBA thinking on where interest rates will now head. The rise in jobless has been long expected (the ANZ job ads series has been signalling such a large monthly fall since January). Judging from the post meeting statement this week from RBA Governor, Glenn Stevens, the cash rate is now where the RBA expected it to be to cope with a surge in unemployment and an economy expected to contract in calendar 2009.