By Ambar Warrick
Investing.com -- Australia’s job market grew far more than expected in March, data showed on Thursday, pointing to a tight labor market that could keep inflation elevated and provide more headroom to the Reserve Bank to potentially hike interest rates again.
The number of employed people in the country increased by 53,000 in March, far more than expectations for a rise of 20,000, according to data from the Australian Bureau of Statistics. The participation rate also grew to 66.7%, while unemployment remained steady at 3.5%.
While monthly working hours fell slightly in March, they continued to trend at relatively high levels, further indicating a tight labor market.
"The strength in hours worked relative to employment shows the high level of demand for labor, to some extent, is being absorbed by people working more hours,” Lauren Ford, ABS head of labor statistics said in a note.
The stronger-than-expected data comes amid a continued labor shortage in the country, which has kept the jobs market running tight over the past year. But this has also disrupted some economic activity, with several businesses facing increased difficulty in finding skilled workers.
The Australian dollar shot up 0.4% after the data, given that it could pressure the Reserve Bank of Australia (RBA) into raising interest rates further.
While the bank recently announced a pause in its rate hike cycle, Governor Philip Lowe warned that stubborn inflation could invite more policy tightening.
Strength in the labor market has been one of the few bright spots in the Australian economy, and has also factored heavily into the sharp rise in inflation seen over the past year.
While inflation eased over the past two months, it still remained well above the RBA’s 2% to 3% target range.
The central bank is also targeting some cooling in the jobs market as it moves to curb high inflation. The bank hiked rates by over 300 basis points in the past 12 months.