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Strength to strength: Job market remains a beacon for uncertain economy

Australia’s jobless rate ticked lower again last month, in part reflecting workers getting back to work after an abnormally large number were waiting to start new roles or return to their jobs in April.

Despite evidence of a slowing economy, the unemployment rate has been holding at below-average levels and jobs growth has been strong. EPA/MICHAEL REYNOLDS

Despite evidence of a slowing economy, the unemployment rate has been holding at below-average levels and jobs growth has been strong. EPA/MICHAEL REYNOLDS

The fallback to four per cent in May from 4.1 per cent in the month prior was broadly in line with expectations and suggestive of enduring resilience in the labour market even as the economy slows to a crawl.

Yet behavioural quirks could in part explain the fall in the jobless rate and the slightly above-forecasted 39,700 jobs created, Australian Bureau of Statistics head of labour statistics Bjorn Jarvis said.

Jarvis said people starting or returning to their jobs in May after indicating an attachment to a role in April explained some of the fall in unemployment and rise in employment.

Australia’s job market has remained a bright spot in an otherwise bleak economy under pressure from higher interest rates and elevated inflation.

Even as the economy slows, which is an expected consequence of the Reserve Bank of Australia’s series of interest rate hikes, the unemployment rate has been holding at below-average levels and jobs growth has been strong.

IG market analyst Tony Sycamore said the labour force numbers would not impact next week’s RBA board meeting, where rates were likely to stay on hold at 4.35 per cent for the fifth meeting in a row.

The unemployment rate at four per cent was in line with the RBA’s forecast for the June quarter, Sycamore said.

Treasurer Jim Chalmers said the May data sets showed the labour market remained “an important source of strength in difficult times”.

“Despite our economy weakening substantially as a result of higher interest rates, persistent inflation and ongoing global uncertainty, our labour market remains resilient and that’s clear from today’s result,” he said.

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Jarvis said the employment-to-population ratio and participation rate – which held flat in May – were both much higher than pre-pandemic levels.

“Together with elevated levels of job vacancies, this suggests the labour market remains relatively tight, though less than in late 2022 and early 2023,” he said.

Hours worked fell by 0.5 per cent, with the bureau pointing to sickness as a reason for some of the reduction in hours worked over the month.

 

 

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