By Rachel Clun and Shane Wright
The unemployment rate has eased slightly to 4 per cent in May, from 4.1 per cent the month before, as a higher than expected 39,700 people secured work.
Economists had forecast about 30,000 jobs would be created in the month, but Australian Bureau of Statistics head of labour statistics Bjorn Jarvis attributed the higher number to the fact there had been more unemployed people waiting to start work in April than usual.
The unemployment rate fell 0.1 of a percentage point to 4 per cent.Credit: Louise Kennerley
“Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs,” he said.
“There are now almost 600,000 unemployed people, however, that is still nearly 110,000 fewer people than in March 2020, just before the pandemic.”
The number of unemployed people fell by 9200 over the month, according to the bureau.
While seasonally adjusted unemployment declined slightly, it lifted to 4 per cent in trend terms, after sitting at 3.9 per cent for six months.
Due to the increase in employment and fall in unemployment, the seasonally adjusted employment- to-population ratio remained at 64.1 per cent and the participation rate remained at 66.8 per cent – both still far higher than pre-pandemic levels.
“Together with elevated levels of job vacancies, this suggests the labour market remains relatively tight, though less than in late 2022 and early 2023,” Jarvis said.
In trend terms, both the underemployment rate (6.7 per cent) and underutilisation rate (10.6 per cent) remained flat.
Treasurer Jim Chalmers said the figures showed the labour market was a source of strength in the current difficult economic times.
“We are fighting inflation and repairing the budget without smashing the economy and we see that in these tens of thousands of new jobs created in May,” he said.
“Despite our economy weakening substantially as a result of higher interest rates, persistent inflation and ongoing global uncertainty, our labour market remains resilient and that’s clear from today’s result.”
The unemployment rate is already around the Reserve Bank’s forecast for June, and economists said the gradual tightening of the jobs market was positive news for the central bank ahead of its board meeting next week.
Betashares chief economist David Bassanese said the slow upward march in unemployment was “almost too good to be true”.
“As in the United States, the slow gradual rise in the unemployment rate is consistent with the ‘Goldilocks’ or ‘soft-landing’ scenario markets have long been hoping for,” he said.
“Consistent with such glacial labour market slowing, wage growth is also slowing in both economies, which strongly suggests service inflation will also ease further and the next move in US and Australian official rates will be down.”
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.