Monday, 13 April, 2015

Unemployment rate to hold steady in March

This week’s jobs figures are unlikely to give jobseekers a reason to smile, because employment growth is only just managing to keep up with population growth.

The number of Australians with jobs is expected to have risen by 15,000 in March, according to an AAP survey of 14 economists, after a similar gain of 15,600 in February.

That will keep the unemployment rate steady at 6.3 per cent for the second month in a row when the Australian Bureau of Statistics releases figures on Thursday.

Commonwealth Bank economist John Peters said a sluggish economy is the reason why the unemployment rate has stayed at or near 12-year highs in recent months.

“Overall, the labour market over 2014 and early 2015 has been soft on the back of below-trend economic growth,” he said.

“The economy continues to grow at a below-trend pace with falling business investment the major issue of concern.”

Mr Peters said a sluggish set of jobs numbers will make a Reserve Bank of Australia rate cut in May more likely, after the central bank kept the rate unchanged for a second month in a row in April.

ANZ chief economist Warren Hogan warned that the unemployment rate was more likely to rise rather than fall in 2015.

“This likely reflects that job losses in areas such as mining and manufacturing are causing a greater inflow of labour than other sectors of the economy are capable of absorbing,” he said.

“In all, gross domestic product growth is still soft, with a recovery in the non-mining sectors lacklustre.”

The ANZ job advertisements survey, a key indicator of the jobs market, showed there was a 1.4 per cent fall in the number of jobs advertised on the internet and in newspapers in March, the first fall since May 2014.

However, Mr Hogan said, the number of jobs being advertised was still at an elevated level, which should stop the unemployment rate from rising too far.

“We believe the lower interest rate environment will assist the recovery in non-mining business investment and household consumption,” he said.

Citi economists Josh Williamson and Paul Brennan said sluggish employment growth would result in a third interest rate cut this year, after one in May, taking the RBA’s cash rate down to 1.75 per cent in the second half of 2015.

“The economy is not creating enough jobs to stop the unemployment rate from rising,” he said.

“The likelihood of an even further rise in the unemployment rate before the end of the year would eventually force the RBA to cut rates again.”