RBA: Underutilisation Tight, Hours & Vacancies Moderating
Deputy Governor Hauser said this month that the RBA is alert to the possibility of labour market overheating but it’s unclear as to the level of spare capacity, as it is unusual to have strong jobs growth with subdued activity. The tight labour market was the strongest argument to leave policy on hold in February. The surprising 52.8k decline in February employment is only one data point and the ABS said it was impacted by fewer older people returning to work. Also the RBA looks at a range of indicators and some tightened in February.
- The underemployment rate fell 0.1pp to 5.87%, the lowest since August 2008. With the unemployment rate slightly lower to 2 decimal places, the underutilisation rate fell 0.2pp to 9.9%, suggesting that labour market conditions remained tight.
Australia underutilisation %
- The youth unemployment rate is seen as a lead indicator of the labour market and it was steady at 9.1% in February. It peaked in August and is now 0.9pp below that rate.
- Hours worked were softer in February falling 0.4% m/m with 3-momentum easing but remaining solid. Full-time hours posted their second consecutive monthly fall but were still up 2.5% y/y.
- Vacancies remain at robust levels but continue to ease. Internet vacancies-to-unemployment moderated towards its historical average in February down 1.5pp to 34.3%. SEEK February job ads fell 1.8% m/m to be down 7.5% y/y but there was likely some payback for January’s outsized 4.2% m/m rise.
- NAB’s availability of suitable labour as a severe output constraint in its quarterly business survey levelled out in 2024 and rose 0.6pp in Q4. The RBA noted in its February statement that this and comments from its business liaison “suggest that availability of labour is still a constraint for a range of employers”.
Australia internet vacancies/unemployment %
Source: MNI - Market News/ABS/Refinitiv
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GOLD: Back to Normality as Gold Rallies Again.
- As Friday’s sell off fades into the background and the rally resumes, the biggest sell off of the year appears to be nothing more than profit taking, a view supported by holdings data showing money managers have reduced positions.
- Overnight, gold resumed its rally up +.49% to US2,896.56 in US trading and despite a slow start in the Asian trading day, suddenly jumped higher to bust through $2,900 to reach $2,909.80.
- Gold has benefited from concerns over tariffs and overnight the President spoke again about tariffs saying, “On Trade, I have decided, for purposes of Fairness, that whatever Countries charge the United States of America, we will charge them - No more, no less!" He continued saying "I have instructed my Secretary of State, Secretary of Commerce, Secretary of the Treasury, and United States Trade Representative (USTR) to do all work necessary to deliver reciprocity to our System of Trade!"
- The technicals for gold remain the same, with the uptrend still intact and with the risks of an all-out trade war coupled with an signs that inflation isn’t gone in the US, the near term demand dynamic for gold could see it push through the $3,000 barrier sooner than expected.
OIL: Crude Continues To Find Support From News Of Supply Risks
Oil prices are higher today with WTI up 0.8% to $71.31/bbl after a low of $71.13 and Brent steadfy around $75.25/bbl following a trough of $75.05. They rose on Monday driven by news of private talks amongst OPEC members to possibly delay the start of output normalisation again. The USD index is up 0.2%.
- An attack by Ukrainian drones on Russian oil infrastructure has also supported prices. It has resulted in flows from Kazakhstan having to slow. They had been scheduled to run at 1.6mbd this month and next.
- If OPEC again delays its gradual reduction in output cuts due to begin in April, it would be the fourth such postponement. The group had planned to increase production by 120kbd but excess global supply appears to be disrupting the schedule. Bloomberg is saying that Russia’s Deputy PM is denying that talks are underway.
- Market participants are more bearish on oil with prompt spreads narrowing and bullish positions being decreased.
- Later the Fed’s Daly and Barr speak and February US Empire manufacturing and NAHB housing print. There are also UK labour market data, February euro area ZEW and January Canadian CPIs. The ECB’s Cipollone participates in an MNI Connect event.
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