Jobs market to hold strong in face of Donald Trump’s tariff threat
As US tariffs on steel and aluminium threaten to put thousands of Australians out of work, they can at least be encouraged that jobs remain plentiful in a historically strong labour market.
The unemployment rate is expected to remain at 4.1 per cent, well below pre-pandemic levels, when the Australian Bureau of Statistics releases labour force statistics on Thursday.
Market consensus is for 30,000 new jobs to have been added to the economy in February, following an unexpectedly strong 44,000 gain in employment the month before.
The surprise was mostly due to seasonal factors, with more people attached to a job but waiting to start work than usual, NAB economists Tapas Strickland, Taylor Nugent and Gavin Friend said.
That sets up the prospect of some payback in February, with the trio going against the crowd and predicting the unemployment rate to drop to four per cent, following a 10 basis point lift in January.
The labour market’s persistent strength, which has obliterated all expectations of the Reserve Bank, has been underpinned by growth in the non-market sector.
Health care, education and public administration dominated gains in employment in 2024, the ABS’s labour account figures released earlier in March revealed, although the market sector did show some improvement, including a 3.9 per cent growth in mining jobs over the year.
Tightness in the labour market is a key concern of the RBA as it weighs up further cuts to the cash rate.
The central bank’s chief economist, Sarah Hunter, will speak at the Australian Financial Review Banking Summit on Tuesday.
While she will certainly be tight-lipped on any forward guidance, eyes will be on her assessment of the impact of US President Donald Trump’s latest tariff announcements on Australia’s growth and inflation outlook.
AMP chief economist Shane Oliver said an escalating trade war with the US adds to the case for more rate cuts.
“This is because the escalating US tariffs pose more of a downside risk to Australian growth and less of an upside threat to inflation,” he said.
Prime Minister Anthony Albanese has ruled out imposing reciprocal tariffs on the US, which will limit the immediate price impact on imported goods, while any boost to inflation from a weaker Australian dollar will be offset by weaker economic growth, Dr Oliver said.
Tariff announcements last week sparked a global stock market sell-off as traders contemplated the risk of a US recession.
That could check the upward momentum of the Westpac-Melbourne Institute leading index, which anticipates future movements in the Australian economy, according to Westpac economists.
It rose to 0.58 per cent in January — a two-and-a-half-year high.
US investors have taken to bargain hunting following a tumultuous week in which Mr Trump’s escalating trade war fuelled recession fears and doused risk appetite.
The S&P 500 and Nasdaq on Friday logged their biggest one-day percentage gains since November 6, the day after he was elected.
The former advanced 117.42 points, or 2.13 per cent, to 5638.94 and the latter gained 451.07 points, or 2.61 per cent, at 17,754.09, while the The Dow Jones Industrial Average rose 674.62 points, or 1.65 per cent, to 41,488.19.
Australian share futures jumped 85 points, or 1.09 per cent, to 14,308.
The benchmark S&P/ASX200 was up 40.6 points, or 0.52 per cent, to 7789.7 at the closing bell on Friday, while the broader All Ordinaries was up 46.7 points, or 0.59 per cent, to 8013.3.
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