Australia's Labour Force Survey for May is out at 1130 AEDT today. This follows a very weak report for April where a near 19k fall in employment sent the unemployment rate to a 4-year high of 4.5%. Seasonal volatility around the Easter holiday period is widely thought to have been influential, driving expectations for a rebound in today's report. The RBA left rates on hold at last week's meeting, pausing its tightening cycle after three straight hikes. Governor Bullock expressed no immediate concern over the rise in the unemployment rate, but pricing for any further tightening this year has been wound back to a 1 in 3 chance.
May preview: Rebound expected
Expectations that the April report was heavily affected by seasonality around Easter has seen consensus fall on the side of forecasting a rebound in May. Employment is expected to rise by 30k (range: 15-45k), more than reversing the 18.6k decline in April. As the chart below shows, April was an outlier result on recent form given that employment was coming off four straight upside surprises. The unemployment rate is expected to tighten slightly by falling back to 4.4% from 4.5% currently (range: 4.3-4.6%).
April recap: Unemployment rate reaches 4-year high
The unemployment rate lifted to its highest since late 2021 at 4.5% as employment fell by almost 19k. These were significant downside surprises on the forecast outcomes for a 17.5k rise in employment and a steady unemployment rate at 4.3%. Seasonal volatility likely played a role as the survey period coincided with the Easter holidays, though that is yet to be confirmed.
April was the weakest month for employment since last November, with the 18.6k decline including falls in both the full time (-10.7k) and part time segments (-7.9k). That saw the unemployment rate rise from 4.3% to 4.5%, even as a decline in the participation rate (66.7%) reflected fewer people entering the labour force in April.
Notwithstanding this, underemployment (including those wanting more hours) declined from 5.9% to 5.8% as hours worked posted a strong 0.8% month-on-month increase. Combining unemployment and underemployment, total underutilisation rose from 10.2% to 10.3%.
