Labour market pulls back in May, but good news overall

Employment fell by 2,500 in May, following a sharp gain of 87,600 in April, as the unemployment rate held firm at 4.1 per cent for the fifth consecutive month, according to May’s Labor Force survey. While total employment dipped slightly, the underlying trend points to continued strength in full-time roles and hours worked.

“Overall, the labour market in Australia remains in a solid position. The unemployment rate is low, and employment has risen by 362,000 over the past year. This is a good news story,” said Senior Economist Belinda Allen. 

“Looking ahead, next week’s monthly CPI Indicator for May will be the final key piece of data ahead of the July RBA decision – and while our base case remains for an August rate cut, we recognise that the balance of risks have shifted towards a July cut.”

Key highlights from the May data: 

• Full-time employment rose by 38,700, while part-time employment fell by 41,100.
• Hours work bounced in the month, rising by 1.3 per cent.
• Female employment increased by 14,700, continuing its strong annual growth of 3.1 per cent, driven by gains in the non-market sector. Male employment declined by 17,100, with annual growth at 1.5 per cent.
• Annual employment growth sits at 2.3 per cent and hours worked at 3.1 per cent - both outpacing GDP growth 

Ms Allen said while non-market employment has been a key driver of recent gains, early indicators suggest this trend may be moderating. Market sector employment will need to pick up to maintain current momentum.

See here to read Belinda’s full analysis.

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