Australian jobless rate falls to 30-month low on more part-time work

A homeless man waits for charity in the central business district of Sydney.
A homeless man waits for charity in the central business district of Sydney.PHOTO: AFP

SYDNEY (REUTERS) - Australia's unemployment rate surprised by falling to 30-month lows in March as the economy generated more part-time work after a run of meagre months, leading investors to lengthen the odds on another rate cut.

The report on Thusrday (April 14) from the Australian Bureau of Statistics showed the jobless rate dipped to 5.7 per cent in March, the lowest since September 2013, when market forecasts had been for a rise to 5.9 per cent.

Some 26,100 net new jobs were created in March, again topping forecasts of 20,000, though all the gains were in part-time work as full-time employment slipped 8,800. Annual jobs growth stayed healthy at 2 per cent.

The monthly jobs numbers are notoriously volatile and the Reserve Bank of Australia (RBA) tends to focus on shifts in the unemployment rate to gauge the health of the labour market.

Yet an apparent slowdown in jobs growth over the turn of the year has given policymakers pause, with RBA governor Glenn Stevens recently calling the data "more ambiguous".

Markets assumed the pick-up in jobs in March combined with the drop in the unemployment rate would likely offer some comfort to the central bank and pared back the chance of a further cut in the current 2 per cent cash rate.

Interbank futures imply a 14 per cent probability of an easing in May, down from 24 per cent before the data.

The chance of a move by August was still 50-50, in part because aggressive stimulus by other central banks had shoved the local dollar higher in a way that could hinder exports.

Earlier on Thursday, Singapore's central bank surprised markets by effectively easing policy while warning about a less favourable global background.

The uncertain world outlook has made the resilience of the local labour market all the more important and, so far, brisk growth in service jobs has helped offset the drag from a struggling mining sector.

Leading indicators of labour demand, such as vacancies, suggest the outperformance should continue this year.

Earlier this week a well-regarded business survey from National Australia Bank found employment conditions were the strongest since 2011 and more in line with the resilience seen in the official data.

Indeed, the survey was consistent with robust annual job creation of around 220,000, or almost 19,000 a month.

"It is particularly encouraging to see the employment index point towards ongoing strength in the labour market, supported by signs the recovery is broadening into previous trouble spots such as manufacturing," said NAB chief economist Alan Oster.