News

Interest rate cut looks less likely after strong unemployment figures for March

15 April 2016

Better than expected unemployment figures for March have eased pressure on the Reserve Bank to cut interest rates next month.

Unemployment in fact has hit its lowest level since September 2013, currently sitting at 5.7 per cent.

JP Morgan economist Tom Kennedy told Sky News the RBA will be encouraged by the unemployment figures.

“Even though inflation is still providing the board with scope to ease, the activity data is hanging in there,” he said.

“The RBA is on hold, that’s the bottom line.”

National Australia Bank’s David de Garis said the positive unemployment result has cut expectations of a rate cut.

“At the end of last week it was a 40 per cent chance, but the market’s had some strong numbers this week,” he told Sky news.

The Australian Bureau of Statistics figures show the growth in jobs was predominantly in part-time work, and although full-time work and actual hours worked slipped, CommSec’s Savanth Sebastian said the results were still positive.

“While the pessimists may focus on the fact that hour worked fell in March, the slide in the unemployment rate to 5.7 per cent – the lowest levels in two-and-a-half years – will provide a big boost to confidence amongst Aussie consumers,” he told ABC.

“As we saw over the latter part of 2015, job security plays a big part in household consumption.”

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