The Australian Bureau of Statistics (ABS) has released the May labour force report, which reported a steady unemployment rate of 4.1% despite the loss of 2,500 jobs.
The unemployment remained steady due to the 0.1% fall in the labour force participation rate.
However, despite the loss of jobs, monthly hours worked jumped by 1.3% in May.
The underemployment rate also declined by 0.1% to 5.9% and is now down 0.8% year over year.
The following chart from Alex Joiner at IFM Investors plots the unemployment rate against the RBA’s forecast:
“A weak labour market result in terms of employment, but a fall in the participation rate keeps the unemployment rate stable at 4.1%”, noted Joiner on Twitter (X).
“A lot of volatility in full time part-time split, full-time still strong after a solid previous month”.
“The employment result is in isolation a little concerning for the RBA but is still strong over the last two months and the unemployment rate still very low”.
“Nonetheless, it probably ever so slight tips the case for the next cut to be in July. Because waiting for another weak print may leave the Bank behind the curve”, Joiner said.
Despite the low unemployment and underemployment rates, other data suggest that the labour market has weakened materially.
As illustrated below by Justin Fabo from Antipodean Macro, last week’s NAB business survey showed that reported hiring declined in May to be below average levels:
Capacity utilisation has also declined, which has historically corresponded to rising unemployment:
The May unemployment survey from Roy Morgan showed that unemployment has surged higher, putting it at odds with the official ABS measure.
The latest employment surveys for May from SEEK and Jobs & Skills Australia show that the number of job advertisements has fallen heavily.
The above unofficial data suggests that the job market has weakened materially, which strengthens the case for rate cuts.
