Yet another solid month of job gains: CommSec's Craig James

EXPERT OBSERVER

Employment rose for the eighth straight month, up by 25,700 in March after a revised 10,700 increase in jobs in February (previously reported as a 4,600 increase in jobs). Full-time jobs rose by 48,300, but part-time jobs fell by 22,600. Economists had tipped an increase in total jobs of around 15,000.

Hours worked rose by 0.7 per cent in the month to be up 3.0 per cent over the year.

The unemployment rate rose from 4.9 per cent to 5.0 per cent in seasonally adjusted terms. In trend terms the jobless rate remained steady at a 10-year low of 5.0 per cent.

Participation rate: The participation rate rose from 65.6 per cent to 65.7 per cent. In trend terms the 65.6 per cent participation rate remained at record highs.

Unemployment across states in March: NSW 4.3 per cent (February 4.3 per cent); Victoria 4.6 per cent (4.7 per cent); Queensland 6.1 per cent (5.4 per cent); South Australia 5.9 per cent (5.7 per cent); Western Australia 6.0 per cent (5.9 per cent); Tasmania 6.7 per cent (6.5 per cent). In trend terms, Northern Territory 4.4 per cent (4.5 per cent); ACT 3.6 per cent (3.5 per cent).

A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Fairfax, West Australian Newspapers, Seek Limited, McMillan Shakespeare and Skilled Group.

What does it all mean?

Given the recent softening reported by a raft of business surveys, many analysts had been braced  for a weaker job result in March. But they needn’t have feared. Yet another month where more people were looking for jobs with more people finding work. The jobless rate ticked up from 4.9 per cent to 5 per cent. But that is part of the normal monthly volatility. In trend terms the jobless rate remains locked at a decade low of 5 per cent. Get used to seeing a jobless rate around 5 per cent – there isn’t sufficient positive or negative economic momentum to drive the jobless rate away from 5 per cent.

It is worth noting that the proportion of people in jobs or looking for work (participation rate) is at all-time highs in trend terms with the jobless rate at decade lows.

There was good news for Queensland with the trend jobless rate at 5½-year lows. And the West Australian trend jobless rate is at 15-month lows.

The Reserve Bank expects further tightening of the job market to lead to higher wages and higher prices. That expectation remains on track with SEEK today reporting that national wage growth had ticked up to 2.6 per cent.

Yet another bad month for the ‘gloomsters’. More people are finding work and more are people feeling secure in their positions. In turn, this will lead to stronger spending growth, boosting the outlook for consumer and housing-dependent businesses.

The Reserve Bank can rest easy for another month. Rate cuts are not on the near-term horizon, neither are rate hikes. The Reserve Bank believes the best contribution it could provide is to leave the cash rate steady at record lows. And we heartily agree.

The Aussie dollar rose from US71.70 cents to US71.93 cents before settling back near US71.75 cents. Currency markets are comfortable with the economic state of play.

CRAIG JAMES is the Chief Economist of CommSec