What today’s jobs numbers mean for ASX 200 investors

The S&P/ASX 200 Index (ASX: XJO) is down 1.5% in early afternoon trade on Thursday.

That’s roughly where the benchmark index has been at all day.

This sees the ASX 200 down a sharp 7.6% since the closing bell on 2 March.

The broader Aussie sharemarket has come under pressure this month amid ongoing concerns over resurgent inflation and the resulting RBA interest rate hikes. And surging energy prices, fuelled by the war in Iran, have done nothing to assuage those concerns.

Which is why we’ve been keeping a close eye on Australia’s unemployment numbers.

So long as the jobs market remains tight, as it has been, wages are likely to keep rising, adding to inflationary pressures.

In making its decision to raise interest rates by a quarter percentage point to 4.10% on Tuesday, the RBA relied partly on its forecast that unemployment will increase from 4.1% to 4.3% by June.

Which brings us to the latest Australian jobs data, just released by the Australian Bureau of Statistics (ABS).

ASX 200 stays in the red despite unemployment uptick

The ASX 200 is up a slender 0.1% since the ABS released the jobs report at 11:30am AEDT.

Investor reaction has been muted to the news that Australia’s seasonally adjusted unemployment rate increased to 4.3% in February.

Commenting on the jobs data, Sean Crick, ABS head of labour statistics, said:

The number of unemployed people grew by 35,000, contributing to the 0.2 percentage point increase of the unemployment rate in February.

This month we saw fewer people who were unemployed and waiting to start a job in January move into employment in February, compared to recent Februarys. We also saw more people remaining unemployed this month compared to recent Februarys.

Crick added, “This month we saw more people move into part-time employment, particularly those aged 65 and over. Additionally, this month we saw that fewer people are leaving jobs to retire compared to a year ago.”

What are the experts saying about RBA interest rates now?

As for what ASX 200 investors might expect from the interest rates following today’s jobs data, National Australia Bank Ltd (ASX: NAB) noted before the data release (quoted by The Australian Financial Review):

This release will be important for the RBA’s assessment of spare capacity in the labour market, with RBA’s Hauser recently noting that the economy has limited spare capacity, with unemployment coming in “a bit” below expectations and measures of labour demand a little higher.

If unemployment remains at 4.1%, this would do little to ease the RBA’s concerns around labour market tightness. By contrast, a print of 4.2% would ease concern the labour market may be tighter still than their February assessment.

Global X senior product and investment strategist Marc Jocum cautioned that ASX 200 investors are unlikely to see the RBA reverse its tightening policy based on today’s employment figures.

“Today’s jobs data reinforces the tightening bias, suggesting policy will need to stay restrictive for longer than markets may be hoping,” Jocum said.

The post What today’s jobs numbers mean for ASX 200 investors appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.