Australia’s headline unemployment rate increased slightly to 3.8 per cent in March, after employment fell by 7,000 people and unemployment rose by 21,000 people.

The small drop in employment led to the unemployment rate lifting 0.1 percentage points, up from 3.7 per cent in February.

However, a less noisy measure of unemployment gives a clearer picture of where the labour market’s sitting.

Data shows the ‘trend’ unemployment rate remained steady in March — at 3.9 per cent — for the fifth month in a row, reflecting some underlying strength in the economy.

“Despite a small drop in employment, Australia’s labour market remains incredibly tight,” said Callam Pickering, APAC senior economist at global job site Indeed.

On Thursday, coinciding with the release of the March unemployment data, the Reserve Bank also published its latest edition of its quarterly Bulletin.

It had a special section that explained how the RBA assesses “full employment.”

It said RBA officials look at a range of indicators to understand how “tight” the labour market is and, together, those indicators suggested conditions were still tight in the labour market but had eased relative to when things were “very tight” in late 2022.

That message was displayed in the below graphic.

The graphic compared the latest observation of key labour market indicators (blue dots) with observations of recent extreme labour market tightness from October 2022 (orange dots) and more typical labour market outcomes since the year 2000 (grey bars).

“The easing in the labour market since late 2022 is most evident in measures that tend to be leading indicators, such as firms’ employment intentions,” the RBA Bulletin said.

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