Australia (May) Employment Change: +42.3K (expected +16K) & Unemployment 5.2% (expected 5.1%)

Author: Eamonn Sheridan | Category: News

The two 'headlines' are employment change and the unemployment rate. 

Employment Change: +42.3K  HUGE BEAT 

  • expected +16.0K, prior +28.4K

Unemployment Rate: 5.2%  and this is a miss!

  • expected 5.1%, prior 5.2%

Full Time Employment Change: 2.4K

  • prior was -6.3K

Part Time Employment Change: 39.8K 

  • prior was +34.7K   

Participation Rate: 66.0% (this jump will be used to explain higher u/e)

  • expected 65.8%, prior was 65.8%
... the full time / part time split will be a detraction from the big jump in the headline employment change 

Well, that's a messy set of headlines! I would say something for everyone but this might be more case of nothing for anyone?

The "trend' data (the above is the seasonally adjusted, which attracts the first attention, but paying heed to the trend results is worthwhile also):
  • trend participation rate increased to 65.9 per cent in May 2019, a new high
  • trend unemployment rate remained steady at 5.1 per cent, for the third consecutive month
  • trend monthly employment increased by around 28,000
  • both full-time and part-time employment increased by 14,000 persons
  • Over the past year, trend employment increased by 333,000 persons (2.7 per cent) which was above the average annual growth over the past 20 years (2.0 per cent)
  • trend monthly hours worked increased by 0.2 per cent in May 2019 and by 2.5 per cent over the past year. This was above the 20 year average year-on-year growth of 1.7 per cent
  • trend monthly underemployment rate rose slightly to 8.5 per cent in May, returning to the same level as May 2018. The trend underutilisation rate decreased by 0.3 percentage points over the year.

I guess if the RBA is looking for the jobless rate to decline in order to boost inflation then that is the key takeaway from this data. U/e rate is higher - rate cuts still on the table ahead from the RBA.

Other signs of weakness in the data:
  • the full-time / part-time split
  • Also, as posted in the previews (ps this is not a negative but it is a one-off) the election boosted jobs for people at polling places etc. That'll be a factor in the +42K result today. 
  • Underemployment rose
  • And, perhaps also the rise in participation. Underemployment and underutilisation is high; as the jobs market grows there are more people coming into the labour force looking for work. This will keep downward pressure (at the margin) on wage growth … another key indicator that has not been performing well for the RBA (alothough its improving a little). 
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