The Impact of Trump’s Tariffs on Australian Unemployment Rate
According to the Australian Bureau of Statistics, 32,000 Australians found jobs in March. Despite the 2.2 per cent employment growth over the last 12 months, the growth rate is only slightly higher than it was before Covid. The Australian unemployment rate in March rose to 4.1 per cent, falling just under the forecasted 4.2 per cent rate. ABS head of labour statistics Sean Crick says more that 3,000 employees lost their job in March.
In terms of why the unemployment rate hasn’t increased, economists say that Australia’s participation rate has decreased by 0.5 percent. According to Callam Pickering, Asia-Pacific economist at Indeed, this number has impacted employment growth.
"If the participation rate had held steady, at its record high from January, Australia's unemployment rate would have jumped to 4.7 per cent," he said.
Other economists say that despite the slight increase in employment, job vacancies are still higher than normal. Last year around the same time, the workforce was increasing by nearly 100,000 people per quarter.
Economist Sean Langcake said fear surrounding Donald Trump’s tariffs has impacted hiring decisions. Langcake predicts that the unemployment rate will rise a bit more throughout 2025 as economic growth slows.
Additionally, the current uncertainty in the markets makes RBA rate cuts more likely, Pickering said.
"Soft employment growth over the past few months will only give the RBA Board more confidence that this is the right path to take,” he said.
Inflation and Unemployment
Last month the ABS noted that the Australian unemployment rate has been affected by Australia's older-aged population not returning to work. However, they also stated that the employment rate was stronger than the estimate of full employment from the RBA.
Gareth Aird, head of Australian economics at Commonwealth Bank, says that the unemployment rate seems to be in line with the actual level of “full employment.”
Sources:
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