Australia's monthly Labour Force Survey for April is due to be posted by the ABS at 11:30am (AEST) today. Despite the diruptions from the Omicron wave and severe wet weather events on the east coast, the Australian labour market has been resilient in 2022. Strong labour demand has kept employment rising and led to the tightest labour market conditions in well over a decade.
As it stands | Labour Force Survey
Severe wet weather and major flooding on the east coast of Australia contributed to employment slowing to a 17.9k rise in March, well below the 40k increase anticipated and down from February's 77.4k boost. With the participation rate holding at record highs (66.4%), the unemployment rate remained at 4%, its lowest since 2008. Underemployment (6%) and overall underutilisation in the labour market (10.3%) continued to decline to stand at 14-year lows.
March's 17.9k rise in employment was the weakest outcome since the Delta lockdowns during the third quarter of last year. Employment had still increased strongly over the first quarter of the year (123.6k) despite the Omicron and weather-related disruptions to activity and was 3% above its pre-Covid level. Full-time employment lifted by 20.5k in March and had accounted for all of Q1's employment gain (136.4k), with part-time employment down in the month (-2.7k) and over the quarter (-12.7k).
National hours worked fell by 0.6% in March driven by large falls in New South Wales (-1.6%) and Queensland (-2.3%) reflecting the disruptions caused by the severe wet weather events. Meanwhile, Omicron was still contributing to high levels of staff absences but were well down from January's peak. Around 8% of employed Australians reported working fewer hours than usual in March due to either bad weather or illness.
Market expectations | Labour Force Survey
The median estimate is for employment to rise by 30k in April, with forecasts ranging between 20k to 60k. The ABS's high frequency data showed payrolls slowed over the first half of the month leading into the Easter holiday period. School holiday periods, which vary from state to state, were also occurring in and around this point. The risks to the employment figure look to be broadly balanced. The holiday period could see employment coming in below consensus, but it is also possible that the adjustment could come through mainly in a reduction in hours worked. There could also be some catch-up following the slowing in employment in March with labour demand very elevated.
Having fallen just short of reaching a historic milestone in March, the unemployment rate is expected to decline to 3.9% in April, which would be its lowest since 1974. Forecasts for the unemployment rate range between 3.7% and 4%.
What to watch | Labour Force Survey
A fall in national unemployment below 4% would generate most of the headlines and would be a significant achievement given that through the last cycle the unemployment rate never got close to these levels despite a more than decade-long economic expansion. There could be some volatility in the outcomes for employment and hours work due to seasonal effects. Market pricing for a 40bps RBA rate hike in June was pared back slightly after yesterday's miss on wages growth, so today's report will be closely watched.
