Australia's unemployment rate fell back to 4.4% in May, halfway to reversing its rise to 4-year highs of 4.5% in April. That was driven by a 40.3k increase in employment (vs 32.5k expected), which rebounded after falling during the Easter holiday period. But downward revisions showed a much larger fall in April (-40.7k) than was initially reported (-18.6k). In a separate release, job vacancies fell slightly for the 3 months ending May (-2.1%) but remained at levels consistent with robust labour demand. Alongside solid household spending data in May, RBA rates pricing was little changed, with markets leaving the door open for a further rate hike without being convinced one is required.
Employment rose by a net 40.3k in May, a gain that was concentrated in the part time segment (35.2k) as full time employment lifted modestly (5.2k). This essentially confirms that the decline in employment in April was due to seasonal effects over the Easter holiday period. But today's report showed that decline was significantly larger than first reported by the ABS, revised to -40.7k from -18.6k previously, implying the weakest result since December 2023. Incorporating revisions, employment gains averaged just 6.4k over the past 3 months, a clear slowing in the momentum seen through the first quarter of the year.
The headline unemployment rate printed at 4.4% in May, in line with expectations and falling back from 4.5% in April - its highest since late 2021. The unemployment rate avareged 4.2% through the first quarter of the year, another sign that labour market conditions have slowed. The more expansive underemployment rate (including those wanting more hours) was 5.9% in May, reversing a modest fall to 5.8% in April. Combined, total underutilisation stands at 10.2%, down from 10.3% in April but has trended higher since the end of last year. On the supply side, labour force participation was 66.7% in the month, rising from a downwardly revised 66.6% in April. Participation remains at historically elevated levels but is off cycle highs above 67%.
The hours worked measure continues to show effects of seasonal volatility. Fewer people taking leave during the Easter holidays contributed to hours worked rising by 0.9% in April, despite the fall in employment. In May, that reversed as hours worked declined by 1.1% month-on-month to see annual growth slow from 3.2% to 0.5%. Both part time (-0.8%) and full time hours (-1.1%) declined in the month.
