Labour Force Survey — May | By the numbers
- Employment increased by a net 42,300 in seasonally adjusted terms -- easily outpacing the 16,000 increase expected by markets. April's initially reported increase of 28,400 was revised up strongly to 43,100.
- The national unemployment rate remained at 5.2%, in line with expectations.
- The underutilisation rate was unchanged at 13.7%, and the underemployment rate increased by 0.1ppt to 8.6%.
- The participation rate lifted by 0.1ppt to a record-high 66.0% (exp: 65.8%).
- Aggregate hours worked fell by 0.3% in the month (prior rev -0.1%) to 1.77bn hours, though annual growth lifted from 1.5% to 2.1%.
Labour Force Survey — May | The details
The national unemployment rate to two decimal places was 5.19% in May, little changed from April at 5.22%. Participation picked up by 0.11ppt from 65.9% to a new record high of 66.01%. In absolute terms, employment growth was strong at a net 42,300 in the month and outpaced the rise in participation of 39,900. As a result, the number of unemployed declined by 2,360.
The national unemployment rate to two decimal places was 5.19% in May, little changed from April at 5.22%. Participation picked up by 0.11ppt from 65.9% to a new record high of 66.01%. In absolute terms, employment growth was strong at a net 42,300 in the month and outpaced the rise in participation of 39,900. As a result, the number of unemployed declined by 2,360.
For the second consecutive month, strength in part-time work was evident. May's 42,300 net increase was driven largely by part-time work (+39,800) with a small contribution from full-time work (+2,400). Coming off a weak base (employment fell by a net 300 in May 2018) the pace of employment growth in annual terms accelerated from 2.54% to 2.88% -- its strongest since March 2018. Annual growth in full-time work is running at 3.12% -- a 13-month high -- while the pace in the part-time segment is 2.36% -- its fastest in 5 months. (click charts to expand)
Somewhat strangely, despite record particpation and strong employment growth, hours worked declined for the second consecutive month easing by 0.3% in May following a 0.1% fall in April. However, growth through the year picked up to 2.1% from 1.5% driven by a base effect. Adjusting for the increase in employment, average hours worked per employee in the month fell by 0.7% to 137.9 hours and is also 0.7% lower across the year.
Looking at the state-level data, there were mixed outcomes across the nation in May. New South Wales' unemployment rate was unchanged at 4.6%, while there were declines in Victoria (-0.2ppt) to 4.6%, South Australia (-0.4ppt) to 5.7% and Tasmania (-0.4ppt) to 6.4%. Unemployment rates increased in Queensland (+0.3ppt) to 6.2% and Western Australia (+0.2ppt) to 6.3%. The breakdown of employment growth for each state on a monthly, quarterly and annual basis is shown below.
Labour Force Survey — May | Insights
The key takeaway is that while employment growth is strong so is growth in workforce participation. In that scenario it is difficult to make meaningful inroads into the spare capacity that the Reserve Bank of Australia (RBA) sees in the labour market. With the participation rate showing no sign of slowing the RBA will look to ease the cash rate further in order to speed up the pace of employment growth. Financial markets expect the next cash rate cut to come by around August.
