Australia's monthly Labor Force Survey is due this morning (11:30am AEST) covering the May reference period. The national unemployment rate lifted to 4.1% in April despite a stronger-than-expected employment outcome as labour force participation increased. In today's report, employment is forecast to increase by 25k, lowering the unemployment rate back to 4%.
A recap: Unemployment rate drifts up despite a strong employment gain
Employment increased by a net 38.5k in April, well above the 20k rise expected following a 5.9k decline in March. The part-time segment (44.6k) accounted for all of the increase in employment as the full-time segment declined (-6.1k). While recent monthly outcomes have been volatile - largely reflecting behavioral shifts in the post-pandemic labour market - employment gains averaged 50.3k (per month) for the 3 months to April, the fastest pace since May last year.
Despite the improving momentum in employment, the unemployment rate drifted up from 3.9% in March to 4.1% in April, its highest since January and before that early 2022. But there were caveats to the rise in unemployment as it came alongside an increase in the participation rate (66.7% from 66.6%), and the ABS also highlighted that a larger number of people than unusual were waiting to commence a new job after the Easter holiday period, counted as unemployed in the April survey.
Following strong gains in February (2.9%) and March (1.2%), hours worked flatlined (0%m/m) in April. The earlier timing of Easter in 2024 as well as school holiday periods varying across the states meant that the April outcome contained plenty of noise.
Employment expected to advance further in May
Employment is expected to rise by 25k in May according to the median estimate in the Bloomberg survey, albeit a forecast with very little conviction as estimates range from -10k to 107k. Given the momentum in employment, and allowing for the effect of previously unemployed workers commencing new jobs, risks could be skewed to the upside of the median forecast. The unemployment rate is expected to decline to 4% from 4.1%, though again the range of estimates is very wide (3.9% to 4.3%); meanwhile, the participation rate is anticipated to remain broadly unchanged.