RBA unlikely to take monthly labour market report at face value

Australia's labour data for the month of February came in with mixed results as on one hand, total employment only rose by a nominal sum of 0.3K during the month in contrast to market expectations of a rise of 13.5K. This is the third consecutive of weakness seen in recent months although the figure for January was marginally revised higher to reflect a slightly softer fall of 7.4K compared to the -7.9K that was originally reported.

However, on the other hand the unemployment rate came in surprisingly better, the index slipped by 0.2 ppt to fall to 5.8% in February after spiking higher to 6.0% in the previous month. This is the lowest figure since November 2013 and reflects slight improvement in the labour market.

Recently, the minutes of RBA's March meeting stated that new data would help to assess if the improvement in the labour market is continuing. However, the publication also added that current jobs data is consistent with employment growth in the months ahead although low wage growth is also analogous with spare capacity in the labour market.