Australia's labour force survey for June is due from the ABS this morning (1130 AEDT). Robust labour market conditions were a key factor in the RBA's decision to hold rates unchanged earlier this month against widespread expectations for a cut. Although recent monthly employment outcomes have been volatile, the unemployment rate has held at the historically low level of 4.1% for the past 5 months alongside labour force participation around record highs. Governor Bullock said following the decision that the RBA was taking a cautious and gradual approach to the easing cycle and that it would be closely watching the data, including today's labour market report.
June preview: Anything goes
Expectations are set modestly for today's report that shapes as another wildcard. Employment is forecast to rise by 20k, rebounding a 2.5k fall last time out in May. This would see the unemployment rate holding at 4.1%, based on an unchanged participation rate of 67%. As the chart below shows, employment (green line) has been highly volatile in recent months, so markets will be giving little weight to the expected figure of 20k.
The unemployment rate will be of much greater importance. Any uptick from 4.1% could drive a reaction (weaker AUD and lower yields) on the basis that signs of labour market softning could be enough to nudge a reluctant RBA into cutting rates. Conversely, a steady or lower unemployment rate could see the odds for an August RBA rate cut (90%) pared back.
May recap: Employment falters with surprise fall
Employment faltered in May declining by 2.5k on net (full time 38.7k/part time -41.1k), disappointing expectations for a 21.5k rise that looked to be well in hand after April's strong increase (87.6k). The decline in May is more likely symptomatic of the recent volatility in employment outcomes rather than a deterioration in the underlying labour market conditions.
Speaking to that point, the unemployment rate has remained low and steady in 2025, printing at 4.1% for 5 months in succession. If anything, declines in the underemployment rate from 6% to 5.9% and in total underutilisation from 10.1% to 9.9% suggested the labour market tightened a little in May. While an easing in the participation rate from 67.1% to 67% assisted in holding unemployment steady - even with employment falling - the participation rate is still elevated and stands near record highs.
Hours worked also defied the fall in employment to rise strongly by 1.3% on the month, with base effects accelerating annual growth from 1.1% to 3.1%. Hours rising in May appeared to be a catch up from the month prior following the surge in employment.
