Australia's Labour Force Survey for April is due to be published by the ABS this morning (11:30am AEST). Employment reaccelerated over the first quarter of the year, keeping the unemployment rate around its lowest level dating back to the 1970s. A more moderate increase in employment is expected in April, with seasonality around the Easter holiday period coming into the frame.
As it stands | Labour Force Survey
Australia's labour market remained in robust shape in March. Employment increased well above expectations rising by 53k following a seasonal-related rebound in February (63.6k). Despite a soft start to 2023 (-10.6k in January), employment lifted by 106.1k in the first quarter, its strongest quarterly increase since Q2 2022.
Strength in employment held the unemployment rate to half-century lows at 3.5% in March as labour force participation (66.7%) remained around record highs. Over recent months, there has been some loosening of conditions in the labour market. Both the underemployment rate (6.2%) and total underutilisation (9.7%) increased in March and have risen from their lows in late 2022, while job vacancies have eased from their elevated peaks.
Hours worked were broadly flat in March (-0.2%) after surging in February (3.8%) when many people returned to work from summer holidays. Overall, hours worked declined by 0.4% over the March quarter but were 5.5% higher over the year.
Market expectations | Labour Force Survey
The expected outcome for employment is a 25k rise, with economists' forecasts ranging from 0-40k. That is anticipated to hold the unemployment rate unchanged at 3.5% (range: 3.4-3.6%). The timing of the Easter holiday period shapes as a wildcard in today's report, coinciding with the survey period for April. Whereas the ABS's payrolls series often provides a useful steer on the employment outcome, that is not the case on this occasion. Payrolls fell in the first half of April following a similar pattern around Easter in the past couple of years. But the payrolls data are not seasonally adjusted and the index level in April was broadly unchanged from March.
What to watch | Labour Force Survey
The RBA retains a tightening bias and it will be watching today's report closely. One of the factors the RBA cited in its May rate hike - a decision that caught markets offside - was the robust labour force report for March. As alluded to above, seasonal factors could make interpreting today's report difficult. But any softening in the labour market could be enough to keep the RBA on hold in June, particularly after yesterday's Wage Price Index failed to deliver an upside surprise on its forecasts.
