Key Takeaways
- March employment up 17,900; unemployment held at 4.3%; participation eased to 66.8%.
- Westpac forecasts unemployment to gradually rise to ~4.9%, driven more by slower hiring than job losses.
- Consumer confidence at 64.3pts — 4th lowest since records began in 1973.
- Oil surged toward US$97/bbl, a weekly gain of more than 17% as Hormuz remains effectively closed.
- AUD on track for its first weekly decline in a month around 0.71; markets continue to expect a 25bp May hike.
Market UpdateLabour market holds steady, but risks are building
Australia’s labour market remained broadly stable in March, with employment rising by 17,900, slightly below expectations but still consistent with moderate job growth. The unemployment rate held steady at 4.3%, reflecting a relatively resilient starting point for the economy.
Employment gains were concentrated in full-time roles, while part-time employment declined. This ongoing volatility in composition highlights the uneven nature of hiring but does not yet point to a material weakening in overall labour demand.
The participation rate eased slightly to 66.8%, which helped keep the unemployment rate stable. This reinforces the view that earlier declines in unemployment were partly driven by shifts in participation rather than a sustained tightening in labour market conditions.
Importantly, this data predates the escalation in the Middle East conflict and recent interest rate increases. As a result, it reflects conditions before the emergence of current downside risks to growth and cost pressures from higher energy prices.
The labour market is typically a lagging indicator, meaning any impact from higher fuel costs and global uncertainty is likely to emerge later in the year. Current expectations are for unemployment to gradually rise toward around 4.9%, driven more by slower hiring than widespread job losses.
For the RBA, inflation remains the more immediate concern. While the labour market has been relatively resilient, rising energy costs and inflation risks are expected to keep upward pressure on interest rates in the near term.
Consumer ConfidenceConfidence continues to fall
Oil MarketsOil surges as supply risks escalate
- Oil prices climbed toward US$97/bbl, marking a weekly gain of more than 17% as supply concerns intensified.
- Progress on US–Iran negotiations has stalled, with ongoing military and political tensions reducing the likelihood of a near-term resolution.
- The Strait of Hormuz remains effectively closed, continuing to disrupt a critical global supply route.
- Recent military actions and stricter enforcement in surrounding waters have further complicated shipping conditions.
- The result has been a sharp decline in shipments from key Middle Eastern producers, tightening global supply.
Foreign ExchangeAUD under pressure as risk sentiment deteriorates
- The Aussie dollar held around US$0.71, but is on track for its first weekly decline in a month as global risk sentiment weakens.
- Middle East tensions have weighed on markets, increasing demand for safe-haven USD.
- As a risk-sensitive currency, the AUD has come under pressure alongside Asia equity declines and Hormuz energy concerns.
- Expectations of further Australian rate increases provide some support — strong labour market plus rising inflation linked to oil prices.
- An emerging Australia-Japan economic security agreement covering critical commodities including energy and rare earths offers structural support.
- Near term, the AUD is being pulled in two directions: weaker global sentiment versus higher domestic rate expectations.
Sources: Westpac Weekly (20 April), ABS, Macrobond, Westpac Economics, ANZ-Roy Morgan, Trading Economics. This summary is for informational purposes only and should not be considered financial advice.