The number of unemployed increased by 20,600, which more than offset the 6,600 extra people who landed jobs last month.  

The latest employment figures undershot the market consensus which expected around 10,000 new positions in March.

Compared to major bank economists' forecasts, the latest print was also weaker than anticipated, with ANZ expecting a 25k gain and NAB pencilling in a 30k increase.

Nevertheless, ABS head of labour statistics Bjorn Jarvis said the fresh data marked the return to “a more usual pattern” following volatile datasets with larger-than-usual flow of people into employment in February and smaller-than-usual flows in December and January. 

“The official labour market data has been incredibly choppy over the last six months,” said CBA head of Australian economics Gareth Aird. 

“There have been much bigger swings than usual in the survey outcomes as the ABS has struggled to account for changing seasonal patterns around when people are both hired and commence work,” he added.

Experts anticipated unemployment to resume its uptrend following the unusual gains in February when employment sharply rose to a revised 117,600 off the back of changing seasonal dynamics within the labour market. 

The surge in new jobs in the second month of the year was attributed to the emerging shift in seasonality indicating more employees start or return to work in February.  

"As we move beyond the seasonal fluctuations, we anticipate the unemployment rate to continue its upward trend," RSM Australia economist Devika Shivadekar said.

 "This could alleviate upward pressure on wages, aligning with the RBA's objective of curbing demand-driven inflation.”

The fall in the number of people finding work has pushed the employment-to-population ratio down 0.2 percentage points to 64%. 

Similarly, the participation rate, or the percentage of individuals working or willing to work slipped to 66.6%. 

“The labour market remained relatively tight in March, with an employment-to-population ratio and participation rate still close to their record highs in November 2023,” Mr Jarvis said. 

While both have fallen by 0.4 percentage points since then, the statistician noted “they continue to be higher than their pre-pandemic levels”. 

“The employment-to-population ratio has been above 64%, in trend terms for almost two years since June 2022. 

“This is almost 2 percentage points above its pre-pandemic level,” he added.

Fewer people looking for jobs

More people participating in the jobs market can drive unemployment up. 

However, it appears fewer people were looking for work last month, despite SEEK job ads rising 2.4% in March.

According to NAB's head of market economics Tapas Strickland, the increase in job listings suggests a substantial easing in labour market tightness, while possibly heralding a trough in job advertising. 

“Three of the past four months have been positive,” Mr Strickland noted while acknowledging that the “difficulty in seasonally adjusting data with an earlier Easter may have also contributed and we will likely have to wait until next month to get a clear view of the trend”.

Meanwhile, the underemployment rate, which accounts for people employed in part-time jobs but looking for more work, fell to 6.5%. 

The underutilisation rate, which combines unemployment and underemployment, was steady at 10.3%. 

Aussie employees worked more hours

Despite fewer people starting jobs in March, the number of hours worked lifted 0.9% over the last month, the ABS survey found.

"The recovery in growth in hours worked over the last two months has seen the annual growth rate rise to 1.7%,” Mr Jarvis said. 

“This was still weaker than the annual growth rate in employment of 2.4% but that partly reflects the very high level of hours worked a year ago.”

The monthly hours worked in all jobs in March reached 1,956 hours. 

How will the latest labour data affect RBA’s outlook

The RBA is expected to closely watch today’s labour data to assess the impact of the cash rate and help them decide the direction to take in the Board’s next monetary policy meeting in May. 

The RBA elected to keep the cash rate unchanged when the Board met in March. 

The decision heavily hinged on inflation yet to return to the central bank’s target and the labour market “still slightly on the tight side” given the unemployment rate is still lower than pre-pandemic levels. 

“We hear from a business liaison that businesses are finding it a little bit easier to get workers, but there is still some tightness there, and vacancies and advertisements are still slightly elevated as well,” RBA Governor Michele Bullock said. 

“So, there are signs the employment market as a whole rather than focusing just on the unemployment rate is coming back more into balance, but it’s maybe not quite there yet.”

Economists believe the central bank may have to revise its forecast at their May 7 update in light of recent data. 

“Despite today’s small decline, the labour market may be running slightly hotter than the RBA forecast at the time of their February SMP,” ANZ senior economist Blair Chapman said. 

The RBA expects employment growth to slow to 2% year-on-year and the unemployment rate to reach 4.2% by the end of the June quarter this year. 

“For that to be realised, employment needs to fall slightly in the June quarter and the unemployment rate to increase faster than it has over recent months,” Mr Chapman added. 

The next key piece of domestic economic data to play a huge role in RBA’s policy deliberation is the Q1 CPI due for release on 24 April. 

Photo by Austin Distel on Unsplash