Australia’s jobs pulse stays firm amid fuel shock

Australia’s unemployment rate held at 4.3% in March, defying a widening energy shock from the US-Israeli war on Iran and underscoring the resilience of a labour market that has so far remained tighter than many economists expected. Official figures showed employment rose by about 18,000 over the month, led by a sharp lift in full-time work, even as participation edged lower and policymakers faced a more complicated inflation outlook.

The March data from the Australian Bureau of Statistics showed full-time employment climbed by 52,500, while part-time employment fell by 34,600. Total employment reached 14.77 million, the participation rate slipped to 66.8%, and the underemployment rate held at 5.9%. Hours worked also increased, suggesting employers were still drawing heavily on labour despite pressure from higher borrowing costs and a darker external backdrop.

That mix matters because it points to a jobs market that is not only growing, but doing so in a way that may keep wage pressure and consumer demand from cooling quickly. Analysts had expected a smaller change in hiring and little movement in the jobless rate, so the full-time gain offered another sign that labour demand has not broken decisively under the weight of tighter monetary policy. Reuters reported the March increase in employment broadly matched forecasts, but the composition of that growth was stronger than headline figures alone suggested.

The labour figures arrived as Australia confronts a new inflation hazard from abroad. Oil and refined fuel markets have been jolted by the conflict involving Iran, with the fallout spreading through shipping, aviation and consumer sentiment. In Australia, the pressure has been amplified by a major fire at Viva Energy’s refinery near Melbourne, the country’s largest refinery, which disrupted petrol output and deepened supply concerns at a time when the country remains heavily reliant on imported fuel.

The energy shock is already showing up in business decisions. Virgin Australia said this week it expected a sizeable rise in fuel costs in the second half of its financial year, while capacity adjustments have also entered the conversation for airlines exposed to volatile jet fuel prices. Broader indicators have turned weaker as households and firms absorb the implications of higher transport and energy costs. A Westpac-Melbourne Institute survey reported a steep drop in consumer sentiment in April, reflecting anxiety over fuel prices, higher interest rates and the risk that living-cost pressures could intensify again.

That leaves the Reserve Bank of Australia in a difficult position. The central bank has already lifted rates twice this year to 4.1%, and senior officials have signalled uncertainty over whether policy is restrictive enough to return inflation to the 2-3% target band. In its February Statement on Monetary Policy, the RBA projected underlying inflation would peak at 3.7% in mid-2026, while headline inflation was expected to climb to 4.2% before easing later. Since then, the war-linked rise in fuel costs has threatened to push that path higher, at least in the near term.

For financial markets, the March labour report reinforced the view that the RBA may still have work to do. Reuters said the employment figures kept alive expectations of another increase in May, though that call is far from straightforward. A central bank confronting strong full-time hiring would ordinarily worry that inflation pressures could persist. But a central bank confronting a geopolitical oil shock must also consider the risk of slower growth, weaker confidence and the kind of squeeze that hurts consumption without solving inflation quickly.

Canberra has moved to shore up fuel security as the regional consequences of the Middle East conflict intensify. Australia and Malaysia said on Thursday they would work more closely on energy supply-chain resilience, and Australian officials have also sought additional diesel supplies from regional partners as domestic concerns mounted. Those steps underline how quickly a foreign conflict has become an economic management problem at home, touching everything from logistics and retail fuel costs to monetary policy and household confidence.