A strong jobs report will not be ignored at the Reserve Bank, but you bet there will be a flock of commentators, lobbyists and their employers who will ignore it and still insist that the Australian economy is sluggish, two speed and worse.
That’s rubbish, while some companies are doing it tough in retailing and the dollar is causing pain, an economy stuck in the slow lane does not boost jobs at the rate the Australian economy has been doing.
The disruptions caused by January’s floods are clearly over for the jobs market and the strong growth of late last year has reappeared.
The news saw the Australian dollar jumped and around midnight it hit yet another new high of US1.0509 actually before easing back to trade around $US1.0460 Friday morning in Asia.
Have no doubt, the March jobs report yesterday from the Australian Bureau of Statistics was very upbeat and along with the half a per cent rise in retail sales in February reported a week ago, will bring forward the next rate rise from the end of the year to anywhere from July onwards if the April figures repeat last month’s strength.
Nearly 38,000 new jobs were reported last month and the unemployment rate dipped to 4.9%, back where it was late last year, after sitting on 5% since January.
That was almost double the 20,000 to 22,000 new jobs forecast by the market.
WA remains the strongest employment performer (naturally), but Victoria is now close behind, followed by NSW and SA.
Queensland is still struggling to overcome a property market collapse, the impact of the high dollar and those disasters on tourism and the impacts of the floods and cyclones, but showing some strength because of resources.
Predictably, the drop in joblessness put more fuel into the ascent of the Australian dollar and the dollar bounced, up well above $US1.0460, as investors picked up on the strength of the report and brought forward their timing of the next rate rise.
The manufacturing states of Victoria and South Australia saw the strongest rises in jobs even though they are the ones most exposed to the impact of the high dollar on that sector, while NSW saw a drop in jobs.
The ABS reported the number of people employed increased 37,800 people (seasonally adjusted) to 11.457 million in March.
The increase in employment was driven by an increase in full-time employment, up 32,100 people to 8.106 million, and an increase in part-time employment, up 5,700 people to 3.351 million.
The number of people unemployed decreased by 10,200 to 592,900 in March.
The ABS monthly aggregate hours worked series showed an increase in March, up 13.1 million hours to 1618.3 million hours. And participation rate rose 0.1% to 65.8%.
So all in all every part of the report was solid, which will start concerning the RBA which was a bit sanguine about the outlook in the post board meeting statement on Tuesday.
Governor Glenn Stevens said in his Tuesday statement:
"Growth in employment has moderated over recent months and the unemployment rate has held steady at 5 per cent.
"Most leading indicators suggest further growth in employment, though most likely at a slower pace than in 2010.
"Reports of skills shortages remain confined, at this point, to the resources and related sectors.
"After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn."
With March’s strong outcome the latter part of that paragraph or two about the growth in wages will now come to the fore at the central bank. It is, along with inflation, one of the twin problems for the central bank as it tries to steer the economy through the enormous pressures of the huge resources boom.
While unemployment dipped to 4.9% at the end of 2010, and then bounced back, it hasn’t been below 5% consistently since the onset of the Global Financial Crisis.
For the first time the number of unemployed (at 592,900) fell under the 600,000 mark for the first time since August 2009 when it peaked at 674,300.
Since then not only has the number of unemployed fallen by more than 82,000, but 529,000 new jobs have been created.
Victoria saw unemployment drop a full half a percentage point to 4.5%, although that was partly the consequence of a drop in the participation rate by 0.3%. And the state added about 7,000 jobs.
South Australia also put on 7,000 jobs to drive unemployment there down to 5.4%. WA added 13,000 jobs, but that was only enough to hold unemployment steady there on 4.2%. Queensland added 10,000 jobs, enough to push unemployment down 0.1 of a point to 5.5% (a solid rebound after the floods).
NSW actually lost jobs, despite a rise in female unemployment, and a 0.3 point rise in unemployment to 5.1%
But bank on a rate rise happening sooner rather than later this year if we get another solid month of growth in employment.
The CPI for the March quarter is out at the end of the month, so the RBA board meeting in the first week of May will be one to watch, especially for a change of tone in the post meeting statement.
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And on another issue, Federal Treasurer Wayne Swan Friday morning formally blocked the proposed merger between the ASX and the Singapore Stock Exchanges.
The Foreign Investment Review Board on Tuesday had raised concerns about the proposed $8.4 billion deal between the ASX the SGX arguing it was not in the national interest.
"After a long and careful consideration and consultation, I have today made orders under the Foreign Acquisitions and Takeovers Act to prohibit the proposal by Singapore Exchange to acquire ASX Ltd on national interest grounds," Mr Swan said in his statement.
‘‘In making my decision I have drawn on a broad range of market perspectives from
