For the second month in succession, employment came in above expectations rising by 39.7k in May. This drove the unemployment rate down to 4% after it had risen to 4.1% in April. Labour force participation remained near record highs.
By the numbers | May
- Employment increased, on net, by 39.7k in May, well above the 25k rise expected and an outcome similar to that seen in April (37.4k revised from 38.5k).
- The unemployment rate fell back to 4% from 4.1%, matching expectations.
- Labour force participation was unchanged (after revisions) at 66.8%, a touch below record highs.
- Hours worked declined by 0.5% month-on-month due to illness-related absences, but annual growth swung to 0.6% from -0.8%.
The details | May
This morning's labour force statistics from the Bureau reported a solid net increase in employment of 39.7k following the 37.4k gain in April. However, unlike in April, it was the full time segment (41.7k) that accounted for all of the increase in the latest month, with the part-time segment declining (-2.1k). In April, the composition was part-time up 45k and full-time down 7.6k. The ABS noted in today's release that many of the larger-than-usual number of people who were waiting to start new jobs following the Easter holiday period (who were counted as unemployed in the April survey) moved into employment, boosting the May figure.
For the 3 months to May, employment averaged a 23.7k increase per month, down sharply from the figure in April (50.6k). However, that decline was driven by the surge in employment reported in February (120.4k) rolling out of the calculation for a small decline in March (-6.1k). The true momentum in employment is likely to be somewhere in between - as the increases for April and May imply.
The participation rate held steady at 66.8% in May, resulting in the size of the labour force increasing by 30.5k. With the employment gain exceeding the number of new entrants into the labour force, the unemployment rate declined to 4.0% - partly reversing its rise from 3.9% to 4.1% in April. Alongside this, the underemployment rate (6.7%) and total labour force underutilisation (10.7%) remained unchanged from their levels in the prior month.
Hours worked were weak again, falling 0.5% month-on-month after a 0.2% fall in April. However, these estimates are significantly affected by seasonal volatility; the April figure by the earlier timing of Easter in 2024 and the May estimate by a sharp rise in the number of workers putting in reduced hours in the month due to illness.
In summary | May
Overall, this was another solid update on the labour market, though it shouldn't move the dial too much looking ahead to the RBA's policy meeting next week. The labour market remains robust, but conditions have eased from the peak levels of tightness seen in late 2022 and early 2023. Job vacancy and survey data continue to indicate that labour demand is solid and this should support employment through the back half of the year.
