Australian strong employment report - analyst responses

Analyst reactions to Australia's employment data today

ANZ head of Australian economics Riki Polygenis:

• Today's figures and revisions to recent months paint a healthier picture of the labour market than expected
• Unclear whether the gradual decline in the unemployment rate in the last couple of months suggest the beginning of a new downward trend
• This is not our central case scenario
• Growth outcomes are expected to remain below trend, and retrenchments in the mining sector will continue
• Job advertisements eased in March
• That said, for monetary policy, these stronger figure do lend support to the idea that there will be no further easing from the RBA following the expected cut in May

TD Securities:

• RBA unlikely to view this strong report in isolation
• Business & consumer confidence is still fragile
• GDP growth is still sub-trend
• Sharp decline in key iron ore price - negative impact on the terms of trade, national incomes and budget revenues
• Expect the RBA to cut cash rate in May
• May cut the last in this cycle
• "Expect an easing bias to be voiced for quite some time to keep downward pressure on the exchange rate"

Capital Economics senior Asia economist Daniel Martin:

• Labour market appears to be going through a good spell... unlikely to be sustained
• Economy benefiting from a one-time boost to spending power from the lower petrol prices ... will soon start to fade
• Effects of lower prices for Australia's commodity exports are yet to feed through the economy
• Mining investment still has much further to fall
• GDP and employment growth should slow later this year
• Unemployment will rise much more sharply than most analysts are currently forecasting

CBA chief economist Michael Blythe:

• Employment is stronger and unemployment is lower than we thought
• Unemployment looks to have peaked in August last year and tracked sideways since ... still a lot of work to do to turn that trend down, but this will give the Reserve Bank pause for thought and the certainty that we thought was a May rate cut has a bit of a question mark against it
• We're still saying May
• The rates decision depends more on labour market
• The Reserve Bank will be suspicious of these figures given how much they've changed in the past four or five months

RBC senior economist Su-Lin Ong:

• Strong report across the board... We still treat some of this data with caution because of the changes made last year, but on face value, it is telling you that the labour market is definitely not deteriorating and the unemployment rate seems fairly stable in the 6.0-6.25 per cent range
• It sits at odds with the economy and business confidence
• The odds are that we could still see a cut in May, but these numbers reduce that risk

JPMorgan chief economist Stephen Walters:

• It implies there's an increase of about 80,000 jobs over the last two months, so very strong results
• Problem is there's a lot of issues around this survey
• The bureau of stats has obviously had a revaluation of the methodology around the seasonal factors. One of the outcomes of that is the survey is not perhaps as credible as it was previously
• There's less probability of the RBA cutting in May
• We're sticking with our call that the RBA needs to cut the cash rate because there are still a lot of other moving parts out there that aren't good, like the currency is up quite a bit after this number, inflation next week is probably going to be quite low, business confidence is low, consumer confidence is low, iron ore prices are plunging so the case (to cut) is still there, it just makes it slightly less likely

Summarised via Fairfax & others