Investing.com-- Australia’s labor force shrank slightly in March following an outsized increase in the prior month, although the labor market was still relatively tight as unemployment remained low and participation remained high.
The total number of employed people fell 6,600 in March, data from the Australian Bureau of Statistics showed on Thursday. The reading was weaker than expectations for an increase of 7,200 people, and slowed from the bumper 116,500 jump seen in the prior month.
Australia’s participation rate- ie the percentage of the working-age population that is in the workforce- fell slightly to 66.6% from 66.7% in the prior month.
The country’s unemployment rate rose less than expected to 3.8% in March from 3.7% in the prior month, but remained well below two-year highs hit earlier in 2024.
While Thursday’s reading showed some contraction in the labor force, the sector still remained largely tight after growing rapidly over the past two years.
“The labour market remained relatively tight in March, with an employment-to-population ratio and participation rate still close to their record highs in November 2023. While they have both fallen by 0.4 percentage points since then, they continue to be much higher than their pre-pandemic levels,” Bjorn Jarvis, ABS head of labour statistics said in a note.
Tightness in the labor market is among the key considerations for the Reserve Bank of Australia in altering interest rates, given that a strong jobs market also drove inflation higher over the past two years.
The RBA is likely to keep rates higher for longer in the face of a strong labor force and sticky inflation.