Stable March jobless figures mask gathering pressures, according to the major banks, which have warned that the data provides the RBA with greater agency to continue tightening.
Australia’s unemployment rate held steady at 4.3 per cent in March, but the country’s largest banks have said that the labour market is poised to soften as higher interest rates and the ongoing energy shock feed through the economy.
Australian Bureau of Statistics (ABS) data showed the unemployment rate was unchanged at 4.3 per cent in March, with the participation rate also holding steady at 66.8 per cent in both trend and seasonally adjusted terms.
Employment rose by around 18,000 people, while the number of unemployed fell by about 4,000, underscoring that more Australians were in work even as the jobless rate remained flat.
The composition of employment shifted decisively towards full‑time roles, with full‑time employment lifting by roughly 52,500 people and part‑time positions declining by about 34,600.
ABS head of labour statistics, Sean Crick, noted that the gains were shared across genders, with full‑time employment rising for both men and women and part‑time employment falling for each.
The March release follows back‑to‑back 25-basis-point hikes from the Reserve Bank of Australia (RBA) in February and March, taking the cash rate to 4.10 per cent.
With inflation proving sticky after reaccelerating in late 2025 and early 2026, markets and economists are widely expecting another 0.25 percentage point rise in May.
Westpac describes figures as ‘calm before the storm’
Westpac economist Ryan Wells said the figures should be viewed as a baseline poll taken before the fuel shock fully registered in hiring decisions.
“The March Labour Force Survey (LFS) was in the field from March 1st to 14th. It is too early to expect flow-on effects from the Middle East shock or from recent interest rate rises to be appearing in labour market measures,” he said.
Wells characterised the seemingly steady figures in stark terms and warned that the benign snapshot may not last, describing the numbers as the “calm before the storm.”
“Our current forecasts have the bulk of the labour market softening in the second half of this year, where the unemployment rate is expected to lift to a quarter-average of 4.9 per cent and stay around that level over 2027 as interest rate rises impact,” Wells said.
“The most immediate and pressing concern is now inflation, to which the RBA will respond by deliver three 25bps rate hikes over the next series of policy meetings.”
Westpac is forecasting 25-bp cash rate hikes in May, June, and August, which would take rates to levels not seen since the global financial crisis.
ANZ says labour still tight but flags easing ahead
ANZ’s head of Australian economics, Adam Boyton, stressed that the current unemployment rate still pointed to a tight labour market but said the figures confirmed that conditions were easing compared with earlier in the year.
Boyton said he expected the shift to be reflected in the central bank’s language after its next meeting.
“As a result, we expect a subtle shift in the RBA’s characterisation of labour market conditions and expect they will drop the assessment that conditions have tightened recently,” he said.
He flagged that the full impact of recent geopolitical tensions and higher borrowing costs was yet to show up in the data, particularly given the complications around seasonally adjusting for Easter.
“We expect higher interest rates and increased economic uncertainty to weigh on labour demand, with the unemployment rate to average 4.5 per cent over the final quarter of 2026,” Boyton said.
CBA notes labour market on solid footing, yet says risks building
The Commonwealth Bank of Australia’s economics team described the March numbers as reassuring and consistent with a still‑healthy labour market.
“The labour force survey was well behaved in March,” the bank said.
CBA emphasised that jobs growth had picked up in recent months and that unemployment was still low in absolute terms – even after rising off its earlier trough.
Yet at the same time, the bank stressed that the balance of risks was shifting as elevated rates and the energy crisis sapped momentum.
“We expect the unemployment rate to rise from here as economic growth in Australia slows,” CBA said.
“We expect a peak of 4.7 per cent in late 2027 but risks around this forecast depend on how the energy crisis unfolds from here.”
CBA, ANZ, and National Australia Bank (NAB) continue to predict a single 25-bp hike in May, before a lengthy period on hold, while Westpac remains the outlier in forecasting a longer tightening phase.
[Related: Hauser concedes RBA unsure if cash rate at ‘right level’]
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