Australia’s unemployment rate has remained stable near its lowest level in almost half a century, with youth unemployment and underemployment continuing to decline recently.
The economy added more than 20,000 full-time positions in March, while losing less than 3,000 part-time jobs, leaving the unemployment rate unchanged at a seasonally adjusted 4.0%, according to the Australian Bureau of Statistics.
“4.0% is the lowest unemployment rate in the monthly survey,” That’s what Bjorn Jarvis, head of labor statistics at ABS, said.
Apart from February and March this year, the only other months with 4% unemployment since the monthly job data were published were in February and August 2008.
“The unemployment rate for women has dropped from 3.8% to 3.7%, the lowest since May 1974,” Jarvis said. “It remains at 4.2% for men, its second lowest level since November 2008 and slightly above the December 2021 level of 4.1%.”
The seasonally adjusted number of hours worked fell by 10 million from February to 1.803 billion hours last month.
Labor figures on Thursday are likely to be closely monitored in the federal election campaign, not least after opposition leader Anthony Albanese stumbled on Monday when he was asked to quote the unemployment rate.
The reserve bank will also monitor, as economists believe that interest rates will rise soon – most likely from June onwards. On Thursday, banks ANZ and Westpac became the last to raise some of their mortgage interest rates.
The total number of employees continues to recover from Covid’s interruptions, with 13,389,900 people now working, almost 400,000 more than during the worst downturn in early 2020.
The participation rate remained unchanged compared to February – 66.4%.
Youth employment between the ages of 15 and 24 increased by 36,000 last month, reducing another percentage point of youth unemployment to 8.3%.
“While young people were particularly affected at the beginning of the pandemic and during the Delta period, we have continued to see a sharp increase in youth employment over the last year,” Jarvis said. The ratio of employed young people to the population is now at its highest level since August 2008, he said.
The underemployment rate also decreased by 0.2 percentage points to 6.3%.
Westpac was the only large bank to forecast 4% unemployment, and the other three predicted it would fall to 3.8-3.9%. The market consensus is 3.9%.
Technically, the March figure is the lowest since the 1970s, reaching 3.9542384%, ABS said. This is lower than 3.981% registered in February 2008.
Economists believe that Thursday’s employment figures are slightly softer than expected, with lower unemployment still to come.
“[W]We expect the unemployment rate to fall only slightly from now on, reaching 3.8% by the middle of the year and generally to remain there, “said in a note from the CBA.
“This strongly reflects the economy at NAIRU [non‑accelerating inflation rate of unemployment]which according to the RBA is from the low fours to the high threes.
The bank said demand for labor “remains very high, with vacancies at record highs”, adding that part of that demand would be met “through continued growth in long-term and short-term migration”.
ANZ economist Catherine Birch said her bank expects unemployment “to inevitably fall firmly into the top three.” Its bank forecasts a rate of “3.3% by the end of 2022.
“ANZ job vacancies rose 0.4 percent in March, and there were 423,000 vacancies in February, according to ABS,” Birch said in a note.
“We believe that the RBA will wait until June before raising interest rates, and today’s data will not affect the RBA anyway. But there is a big surprise up [the first quarter consumer price index] can put May on the table. “
The consumer price index for the quarter for March is scheduled for April 27.
Cassandra Goldie, chief executive of the Australian Social Services Council, emphasized the need to “maintain the course of pursuing a historic opportunity for full employment”. She emphasized the risk that income support for those struggling to cope could be terminated before they can find permanent employment.
“We are at a very sensitive turning point,” Goldie said. “We have to learn the lessons [of] the global financial crisis, in which a series of budgets simply cut off income support after the stimulus package. “Goldie said the cuts had led to years of slow economic growth.
Andrew McKellar, chief executive of the Australian Chamber of Commerce, said the low unemployment rate “coincides with the most serious labor shortage in 48 years, along with the highest vacancy rates since the start of the recordings”.
He warned that if the shortage is not overcome, “businesses that are already strained by an ultra-tight labor market will be pushed to the breaking point.”
“The next federal government needs to pull all the levers to tackle the chronic skills shortage,” McKellar said. “A commitment to consistent and long-term funding for vocational education and training is essential to rebuilding our local skills base.”
Reiterating the CBA, he added that “increasing the target for permanent admission of skilled migration to 200,000 for at least the next two years [would] be critical. ”