Australia's unemployment rate remained at 14-year lows coming in at 4% in March. The flood disasters in New South Wales and Queensland and ongoing pandemic headwinds contributed to a slower rise in employment and fall in hours worked during the month. The labour market continued to tighten and elevated job vacancies should generate more progress in the months ahead, consistent with a June start to the RBA's rate hike cycle.
Labour Force Survey — March | By the numbers
- Employment lifted by a net 17.9k in March, weaker than the 40k rise expected and well down from February's 77.4k increase.
- National unemployment remained at 4%, slightly falling short of printing at the 3.9% level expected.
- Labour force participation was unchanged at 66.4%.
- Hours worked declined by 0.6% over the month, with the effects of the flooding in New South Wales and Queensland and ongoing Omicron isolation requirements weakening the momentum from February's rebound (8.9%m/m).
Labour Force Survey — March | The details
The Australian labour market continued to tighten in March, though employment slowed and hours worked fell due to the flooding disasters in New South Wales and Queensland and the ongoing disruptions from Omicron. Employment slowed to a 17.9k rise on the month, its weakest outcome since October, with full time employment rising by 20.5k but part time employment falling by 2.7k. The floods contributed to employment falling in New South Wales (-0.3k) and slowing in Queensland (8.0k). Victoria also posted a weak outcome (-2.7k).
Hours worked declined in March (-0.6%m/m) and reflected the disruptions businesses faced from staff absences from the floods and Omicron. The ABS reported that 504k Australians worked fewer hours than usual due to bad weather (or plant breakdown), a surge from the series average of just over 40k per month. Accordingly, the weakness in hours worked was centred in New South Wales (-1.6%m/m) and in Queensland (-2.3%m/m).
Omicron remains a key factor behind staff shortages, with 577k people working fewer hours due to illness or sick leave; this is down from January's peak (746k) but still very elevated. Media reports over recent days around disruptions to capital city airports in particular in the lead-up to the Easter holiday period suggest Omicron-related absences have remained an issue in April.
Factoring in the decline in March, growth in hours worked on a pre-Covid comparison eased to 2.1% from 2.7% in February. Growth in employment over the Covid period was little changed at 3% from 2.9%.
With the participation rate remaining steady at record highs at 66.4%, spare capacity in the labour market was still falling through March despite the slower rise in employment. Note that participation in New South Wales was steady (65.5%) and fell in Queensland (66.6%), likely with some impact from the floods. The share of the working-age population employed has never been higher in the nation's history (68.8%).
The unemployment rate was posted at 4%, though it just missed printing at 3.9% (it fell from 4.04% to 3.95% taken at two decimal places). Despite the decline in hours worked, both underemployment (6.3% from 6.6%) and underutilisation (10.3% from 10.6%) fell in March. Reported to the standard convention of 1 decimal place, national rates of unemployment, underemployment and total underutilisation are at their lowest since 2008.
Labour Force Survey — March | Insights
Employment slowed to a 0.1% rise in March on temporary flooding and Omicron effects, but labour demand remains very strong, pointing to stronger employment outcomes, a tighter labour market and faster wages growth ahead. Data for job vacancies out earlier in the week showed a 3.7% rise in March, keeping vacancies as a share of the labour force at very elevated levels. Market expecations for the first RBA rate rise in June look on track.
