No worries with the solid March jobs report, now for the March quarter Consumer Price Index report next Wednesday which is not expected to worry the central bank – but some headless chickens in the markets might take fright judging by some pre-Easter commentary.
In fact, the chances of an interest rate cut from the Reserve Bank any time soon have faded after more evidence the Australian jobs market is stronger than many analysts and economists had thought with the March Labour Force report from the Australian Bureau of Statistics showing signs of renewed strength.
Another month or two of the sort of strength we saw in March will push the chances of a rate cut out into 2020 at the earliest.
While the trend (the most accurate type of measurement) jobless rate was steady in March at 5.0%, the annual growth rate picked up to 2.4% from 2.3% – comfortably above the 2.0% rate of the past two and a bit decades.
That is also faster the 1.6% growth in the wider population.
The number of new jobs created in the 12 months to March rose to 299,000 – the highest annual total for more than six months. While its not the 300,000 plus we saw for much of late 2017 and early 2018, it was well upon the 297,100 jobs created in the year to February.
The ABS said 21,000 new jobs were created in March, above market estimates (the more volatile seasonally adjusted figure was 25,700 jobs with the unemployment rate rising to 5% as the participation rate edged higher – which is another positive).
Hours worked also rose and there were more full-time jobs created than part-time which were more positives.
For the Reserve Bank, the March jobs report was upbeat news. For the central bank, the health of the labour market is the pre-eminent test it is using as it remains on a wait and hold stance on monetary policy, but with a clear bias to cut rates if the jobs market weakens.
The minutes of its April 2 monetary policy meeting the RBA made the clear point that
“…the Board will continue to monitor developments, including how the current tensions between the domestic GDP and labour market data evolve and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time.”
Next Wednesday sees the release of the March quarter consumer inflation data. Market forecasts (and those from the RBA) call for a weak reading – perhaps 1.7% against 1.8% in the December quarter.
That will not surprise the RBA seeing it has been warning now for the past six months that inflation in the first half of 2019 will be lower than previously thought because of lower petrol prices than a year ago and falls in government administered prices.