By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Unlike in many other countries, Australian employment trends are strengthening, with data out Thursday showing a drop in the country’s unemployment rate to below 5% in March.
The Australian Bureau of Statistics reported Thursday that the unemployment rate decreased to 4.9% for the month, from 5.0% in February.
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Economists had, on average, been expecting no change in the unemployment rate, according to data compiled by Dow Jones Newswires.
Drilling down into the seasonally adjusted monthly figures, employment increased 37,800 to 11.46 million, the ABS said, as full-time employment rose by 32,100 to 8.1 million, while part-time employment increased 5,700 to 3.4 million.
At the same time, unemployment decreased 10,200 to 592,900, and the participation rate increased 0.1 percentage points to 65.8%, according to the ABS.
Australia’s data on unemployment far outstripped comparable figures for the U.S. and Europe. The U.S. unemployment rate hit 8.8% in March, although that was its lowest level for two years, while the unemployment rate in the euro zone declined to 9.9% in January from 10% in December, according to Eurostat figures released March 1.
Interest-rate implications
Paul Bloxham, HSBC’s chief economist for Australia and New Zealand, said the strength of the Australian figures was because the “mining boom is picking up steam and the income flowing into the economy from very high commodity prices is motivating firms to hire.”
He added that the strong Australian labor market is a key reason why HSBC expects the Reserve Bank of Australia to tap on the brakes again in July or August.
“We remain of the view that the next hike by the RBA will be in July or August, with 50 basis points by the end of the year,” he said.
The RBA”s key cash rate is currently at 4.75%. The last time the central bank hiked rates was in November.
After the data, the Australian dollar (AUDUSD 1.0462, +0.0028, +0.2684%) traded up 0.2% at $1.0453 against the U.S. dollar, continuing a run that has seen the currency repeatedly hit fresh post-float highs in recent weeks. Read story on gold and Australian dollar.
