Australian employment came in well above expectations rising by 53k in March after February's post-holiday rebound (63.6k). Employment growth has reaccelerated as labour demand remains resilient to a slowing economy. The unemployment rate (3.5%) remains close to its lowest level in half a century and the participation rate is around record highs.
Labour Force Survey — March | By the numbers
- Employment increased (on net) by 53k in March, well above the 20k lift expected, and backed up the sharp 63.6k rise in February.
- National unemployment rate was steady at 3.5% (vs 3.6% expected), around its lowest level since 1974; however, both the underemployment rate (5.8% to 6.2%) and the total underutilisation rate (9.4% to 9.7%) lifted.
- The participation rate lifted 0.1ppt to 66.7%, just below the record high (66.8%) seen last June. The female participation rate rose to a record high (62.5%). The share of Australians in work is around its highest level on record after rising to 64.4% in March.
- Hours worked softened slightly (-0.2%) coming off their 3.8% surge in February post the summer holiday season.
Labour Force Survey — March | The details
Despite a soft start to 2023, Australian employment reaccelerated over February (63.6k) and March (53k). Full time employment increased by a further 72.2k to follow up February's 79.2k rise; part time employment, in contrast, declined by 34.8k over the past couple of months.
The reacceleration resulted in employment rising by 106.1k in the March quarter, its largest increase since Q2 last year. Furthermore, the 3-month annualised pace elevated to 3.1%, indicating employment growth has returned to the same sort of momentum it had before the summer slowdown.
Post the pandemic and with borders reopened, growth in Australia's working-age population has lifted to be running at its fastest pace (2.3%yr) since 2009. Inward migration is likely boosting Australia's participation rate, which lifted in March to 66.7%, close to its record high. Similarly, the employment to population ratio (share of the working-age population in work) advanced to 64.4% and is also near its historic high. Both measures are up sharply on their pre-pandemic levels: the participation rate is up 0.9ppt and the employment to population ratio has surged 2ppts, reflecting the additional labour that strong employment growth has been able to draw into the labour force.
Robust employment growth kept the national unemployment rate at 3.5% in March, around its lowest level in half a century and well down from its pre-pandemic level of 5.2%. There was some easing in the underemployment rate (+0.4ppt) to 6.2% and in the total underutilisation rate (+0.4ppt) to 9.7%, though both measures remain substantially lower than in March 2020 when the underemployment rate was at 8.7% and underutilisation was 13.9%.
Higher underemployment and underutilisation came on the back of a 0.2% decline in hours worked in March, unable to advance after rebounding sharply in February. This left hours worked down by 0.4% in Q1, a sign that output growth may have slowed further in the March quarter.
Labour Force Survey — March | Insights
Today's report confirmed the strength in employment in February was more than a post-holiday rebound, as labour demand remains robust despite slowing economic conditions. The unemployment rate remains around its lowest level since 1974, coming all the way in from above 5% on the eve of the pandemic. Broader measures of spare capacity, however, have eased and this may potentially keep the RBA on the sidelines with wages growth assessed to be at a pace consistent with a return to 2-3% inflation.
