You are here
Australian jobs surge drives unemployment rate to 4-year low
[SYDNEY] Australia's jobless rate fell to four-year lows in May as hiring blew past all expectations for a third straight month, the most emphatic sign yet that the labour market was hitting its stride after an alarmingly long dormant period.
Data out on Thursday showed the unemployment rate slipped to 5.5 per cent, compared with analysts' expectations for a steady 5.7 per cent. That was the lowest reading since February 2013 and down from 5.9 per cent just two months ago.
Employment jumped a seasonally adjusted 42,000 in May, again handily topping forecasts for a 10,000 gain, while annual jobs growth accelerated to a brisk 2.0 per cent.
That took jobs gains for the year so far to a rousing 153,700 and brought the official data more in line with past strength in leading indicators such as vacancies.
"One strong economic result is viewed with suspicion. Two strong results are viewed with cautious optimism. Three strong job results are viewed as confirmation of a very positive trend," said James Craig, chief economist at CommSec.
"More jobs and more hours worked means more spending and more momentum for the economy."
The upside surprise lifted the Australian dollar a third of a US cent to US$0.7622 and led investors to further scale back to probability of another cut in interest rates.
Interbank futures now imply only an 8 per cent chance of an easing by year end.
The data should offer welcome reassurance for the Reserve Bank of Australia (RBA) which held rates at 1.50 per cent for a tenth straight month in June as it balanced weak domestic demand and inflation against escalating household debt.
Policy makers have been fretting over a "mixed" jobs market was strength in measures of labour demand were not matched by the official numbers, while underemployment climbed to record levels amid an increased casualisation of work.
Yet underemployment ticked down a touch in May and full-time work surged by 52,100. In just the last three months, full-time jobs have climbed 112,800 and far outstripped part-time work.
That should be a positive for household incomes, which have struggled badly in the face of record-low wages growth.
The economy as a whole grew just 0.3 per cent in the first quarter of the year in large part because of weak household consumption.
"Full-time jobs are typically paid more so it should counteract weaknesses from low wage growth," said CBA chief economist Michael Blythe.
"One of the big fears of consumers is about job security. So that should recede and become a positive for consumer spending," he added.
"We have the RBA on hold and a rate hike at the end of 2018."