Australia’s jobless rate falls to 6.1%, but economy faces challenges
Australia’s unemployment rate dipped to 6.1 percent in March, data showed Thursday, a better- than- expected reading that could ease pressure on the central bank to further cut interest rates.
The figure was down from a revised 6.2 percent in February, as 37,664 positions were created, according to the Australian Bureau of Statistics.
Analysts had forecast a reading of 6.3 percent with 15,000 jobs added.
Full- time roles increased by 31,516 while part- time jobs rose 6,148. The participation rate, which measures the proportion of adults in work or looking for work, strengthened from a seasonally adjusted 64.7 percent to 64.8.
The Australian dollar jumped on the news, rising half a U. S. cent to 77.77 U. S. cents.
The Reserve Bank of Australia has been tipped by financial markets and economists to slash the cash rate again this year after cutting it in February for the first time in 18 months, to a record low 2.25 percent.
The RBA has flagged an easing bias as the economy encounters a rocky transition with an unprecedented mining investment boom coming to an end and the non- resources sector struggling to fill the gap.
The unemployment rate has slowly increased over the past year, peaking at a revised 6.3 percent in January — a more than 11- year high.
Economy Facing Challenges
The job gains were led by New South Wales, the country’s most economically strong state.
“The largest state is behind the strength,” Davies said. “The economy in NSW is more diverse and much less exposed to mining and ... the housing market ( in the state) is exceptionally strong.”
But analysts warned that the economy still faced testing times, with some still expecting the RBA to cut rates by 25 basis points in May.
The plunging prices of commodities such as iron ore, Australia’s biggest export, has hit the economy and slashed government revenue.
The iron ore price slumped to a decade- low of US$ 47.08 in early April, driven by a supply glut and soft demand from China, Australia’s biggest trading partner.
UBS senior economist George Tharenou said while the data had improved, the trend in the unemployment rate was still holding around the highest level since 2002.
Inflation figures are due next week ahead of the next central bank meeting on May 5.