Today’s May labour force release from the Australian Bureau of Statistics (ABS) rebounded, with the unemployment rate falling by 0.1% to 4.4%, although it remained above the RBA’s latest forecast.
Chart from Alex Joiner (IFM Investors)
As illustrated below by Alex Joiner, chief economist at IFM Investors, employment increased by 40,300 in May, driven by a 35,180 rise in part-time jobs.
However, the underemployment rate rose by around 0.1% to 5.9%, and the monthly hours worked fell by 1.1%, suggesting weakness more broadly.
Chart from Alex Joiner (IFM Investors)
Regardless, when viewed alongside Wednesday’s 0.2% rise in trimmed mean inflation to 4.6%, it suggests that the RBA may still be inclined to hike the official cash rate at its next meeting:
Chart from Alex Joiner (IFM Investors)
Moreover, today’s household spending data from the ABS also shows that per capita spending rose in May, led by discretionary spending:
Chart from Alex Joiner (IFM Investors)
Inflation is still too high for comfort, the labour market remains relatively tight, and consumers seem to be holding up okay, despite rate hikes, falling home prices, and collapsing confidence.
These factors will have the RBA’s finger on the interest rate trigger.
