Australian Labor Market Strengthens: Employment Growth and Chances of Rate Cuts

The Australian labor market in March showed a recovery after the February decline, which signaled its stability against the backdrop of global economic instability. This is reported by Reuters, reports UNN.

Details

According to official data, the number of employees increased by more than 32,000 people, although analysts expected a slightly higher increase – about 40,000.

Despite this, the unemployment rate remained lower than forecast – 4.1% instead of the expected 4.2%, which coincides with the level recorded in the same period last year.

The Reserve Bank of Australia, which currently maintains the key interest rate at 4.1%, had not previously planned any changes in policy. However, the increasing risks of a global slowdown and signs of a decrease in inflationary pressure may push the regulator to lower the rate as early as May. Markets have actually taken into account the probability of such a step, even allowing for a decrease of 0.5 percentage points if external factors worsen.

Analysts, including Tony Sycamore from IG, point to the unexpected viability of the Australian labor market, but add that against the background of global uncertainty and gradual weakening of inflation, a gradual easing of monetary policy seems logical.

The next RBA meeting is scheduled for May 19–20. By this time, the bank will receive updated data on inflation and April employment. Experts expect that these indicators will additionally confirm the return of inflation to the target range of 2–3%.

It is worth noting that despite the increase in employment, the total number of hours worked in March decreased by 0.3%. This is partly due to bad weather in some regions of the country. At the same time, the level of population participation in the labor market increased to 66.8%.

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