Australia's Labour Force Survey for June is due to be published at 11:30am (AEST) today. Labour market conditions showed renewed strength in May as the unemployment rate fell back to near 50-year lows and the participation rate elevated to a new record high. A continuation of this momentum into June is expected in today's report.
As it stands | Labour Force Survey
The labour market regained momentum in May after slowing around the Easter holiday period; employment surged by 75.9k - its strongest rise in 11 months and well above the consensus estimate (17.5k) - following a 4k fall in April. Gains in both full time (61.7k) and part time (14.3k) employment were posted in May.
Reaccelerating employment saw the unemployment rate fall from 3.7% to 3.6% - just off a half-century low in Australia - and came alongside a rise in the participation rate from 66.7% to 66.9%, a new record high. While there has been some loosening in the labour market with the underemployment rate (6.4%) and total labour force underutilisation (10.0%) rising in recent months, these measures remain at historically low levels.
Despite the strength in the May report, hours worked were reported to have fallen by 1.8% in the month; however, that followed April's surprising increase (2.7%) when more than 5 million Australians were estimated to be on annual leave over Easter. Overall, hours worked are tracking 0.9% higher through the June quarter.
Market expectations | Labour Force Survey
Employment is anticipated to rise by 15k in June, around a wide range of estimates from -10k to 36k. The ABS's high-frequency series reported a 0.1% rise in the payrolls index through the first two weeks of June, indicating a continuation of momentum in the labour market from May. That suggests the risks are tilted to an upside result for employment in June. Meanwhile, the unemployment rate is expected to hold at 3.6% (range: 3.5% to 3.7%), based on an unchanged participation rate (66.9%).
What to watch | Labour Force Survey
After the May report, the key question is whether the momentum in the labour market was sustained into June. As alluded to above, I think that is likely to be the case and anticipate the employment outcome to exceed the modest consensus figure. The rapid pace of growth in the working-age population, I think, will remain a support for employment. For June, there is a risk that hiring by firms may have slowed into the end of the financial year. However, even if this were to be the case, job vacancies - despite moderating from their peaks - remain elevated and are consistent with robust labour demand.
