In terms of the headline data today, the employment gain last month was fewer than 5,000 jobs in net terms, less than one quarter of the 20,000 positions that surveyed economists had expected. All of the gain last month was in part time positions - full time employment fell sharply. Moreover, a downward revision to the previously reported February jobs data means that the run of consecutive gains in employment actually came to a shuddering halt last month, albeit at a still impressive 16 straight gains.
The March jobless rate reported today was 5.5%, as economists had expected, but further revisions mean that this rate was unchanged from February, not a fall from 5.6% as had been expected. Are you still with me on all of this? The participation rate dipped sharply, such that the underwhelming employment outcome did not lift the jobless rate. The ratio of people engaged in the labour force remains elevated, just not as high as before. By region, NSW had the lowest unemployment rate at 5.0%. WA’s 6.9% was the highest.
What do all of these movements mean? Well, looking through the volatility, the main message is that the labour market has started 2018 on an unexpectedly weak footing. Jobs growth has significantly fallen short of expectations so far which, admittedly, were elevated after such a stellar performance in 2017. But, the unemployment rate has stayed broadly flat, owing to pronounced movements of people into and out of the labour force.
All that said, the employment outlook remains positive. Business surveys suggest that most firms still expect to lift hiring this year, a message reinforced by our own Director Sentiment Index this week. Eventually, the participation rate should stop rising, meaning that the jobless rate probably can resume its fall. Ultimately, this should help to boost wages growth from the current near-record lows, as the Reserve Bank of Australia’s economists have been expecting.