April employment rose much more strongly than expected, up 50,100 (consensus +11,000) after the fall in March was revised to 31,200 (-36,100 originally) and a revised 71,700 gain in February. Ironing out the lumps and bumps in the monthly data, employment rose an average 30,200 a month in the three months to April, clearly much stronger than commonly believed and consistent with strengthening economic activity. Strong features of the latest April reading include a 34,500 lift in full-time employment, rising employment in all states except Tasmania (NSW +19,700 and Victoria +8,100), a 0.7% lift in hours worked, rising participation rate to 65.3% and a one notch fall in the unemployment rate to 5.5%. The economy is improving and has just been given an added boost from a cash rate cut. This represents a very favourable environment for risk assets, but it may limit the RBA’s ability to cut the cash rate any further.
