Australia’s rose by a strong 42.3k during the month of May, almost matching the revised gain for April, though an increase in the participation rate to a fresh record high kept the unemployment rate at 5.2 percent, temporarily owing to a heavy impact by the election, which generally sees a lot of people employed to carry it out.
However, labour market slack still remains elevated and the Reserve Bank of Australia (RBA) is not expected to read too much into the strength of employment of May, according to the latest report from ANZ Research.
Employment increased by 42.3k in May, with part-time jobs rising by 39.8k and full-time jobs up just 2.4k. Annual jobs growth accelerated to 2.9 percent y/y, its strongest pace since mid-2018. Given the sharp slowdown in GDP growth since then it seems unlikely that jobs growth can sustain this pace.
Indeed, most indicators are pointing to a sharp slowing in jobs gains over coming months – though admittedly many indicators have been pointing to a slowdown for some time that has not (yet) materialised.
The unemployment rate was 5.2 percent in May, unchanged from April and despite the strong gain in jobs. This reflected a rise in the participation rate to 66 percent for the first time in history. Total labour market underutilisation was also unchanged at 13.7 percent.
State performance was mixed. The unemployment rate fell to 4.6 percent in VIC. This is still some way above the 4.2 percent low of December last year. NSW was unchanged at 4.6 percent, and SA and TAS both saw falls – to 5.7 percent and 6.4 percent respectively. In contrast, QLD rose to 6.2 percent and WA to 6.3 percent.
"Employment growth has accelerated; moving in the opposite direction from what our ANZ Labour Market Indicator would suggest. We do not think this will continue, however, and we see the increased slack in the labour market as a barrier to improving wage growth and inflation," the report added in its comments.