Australia’s part-time employment rose to -7.9K in April, compared with -34.6K in the previous period.
The latest figure shows a smaller fall in part-time jobs than before.
Part Time Jobs Signal Mixed Conditions
The slowdown in part-time job losses to -7.9k is an improvement, but it is still a net loss, pointing to underlying weakness in the economy. This mixed signal creates uncertainty, suggesting we should anticipate higher volatility in the Australian market. This makes the Reserve Bank of Australia’s (RBA) next move on interest rates much harder to predict.
We see the RBA being forced to hold rates steady, as the latest inflation data shows core inflation is still hovering at 3.7%, well above the target band. This persistent inflation, confirmed in a recent speech by the RBA governor, clashes with the softening labour market. This means options on interest rate futures should be priced with a lower probability of a rate cut before the fourth quarter.
For the Australian dollar, this creates a tug-of-war between a weak domestic growth outlook and relatively high interest rates. The AUD/USD, currently trading near 0.6650, will likely see sharp reactions to upcoming inflation and employment figures from both Australia and the U.S. We should consider buying short-dated straddles on the currency pair to position for a significant price move in either direction.
This environment is negative for the ASX 200, as sticky inflation and high rates pressure corporate profits and consumer spending. The continued job losses, even at a slower rate, will likely hit the retail and housing sectors first. We should look at buying puts on consumer discretionary ETFs or the XJO index itself as a hedge against a potential market dip.
What This Means For Market Positioning
This situation is very similar to what we observed back in 2024, when the market priced in rate cuts that never arrived due to stubborn inflation. During that period, implied volatility was often underpriced leading into key economic data releases. History suggests we should prepare for choppy, sideways market action rather than a clear directional trend.
