Data Snapshot: Labour Force - Standing in Defiance

Good afternoon,


The key points in this report are:

 

  • The strength of job growth is continuing to surprise. Employment growth rose a solid 42.3k in May, which was the second consecutive increase in excess of 40k.  Annual growth in jobs pushed up from 2.5% in April to 2.9% in May, the strongest in over a year and is in spite of soft economic growth since the middle of last year.
  • The bulk of the job gains were concentrated in part-time work, lifting 39.8k, in May. Meanwhile, full-time jobs edged up just 2.4k in the month.  
  • The impact of the Federal election could have boosted part-time job growth in May, but to a limited extent given that the reference period for this month’s survey would have been prior to the Election Day being held on May 18.  Even if there were some one-off impacts, we cannot ignore the long-run trend of persistently strong employment gains in the face of weaker economic activity.
  • The unemployment rate held steady at 5.2%, and was again propped up by rising workforce participation. The participation rate rose 0.1 percentage points to 66.0% a new record high.
  • The RBA has brought into focus the labour market in guiding its decisions on monetary policy. While it would be encouraged by the strength of job growth, its attention is on the unemployment rate. More specifically, the RBA’s concern is what the impact would be on inflation. The RBA has said that the unemployment rate could be and should be lower. Today’s data does not alter our view that the RBA will lower official interest rates another two times in August and November of this year.

 

Please see the attached report for more information.



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