Unemployment rate remains at 4.1 per cent for three consecutive months as markets continue to favour July cash rate cut
The data is critical for the Reserve Bank of Australia which will closely examine the unemployment rate ahead of its July cash rate decision when it is tipped to deliver mortgage holders more financial relief.
Data from the Australian Bureau of Statistics showed employment fell by 2,000 during the month but remained up 2.3 per cent compared to May 2024.
The participation rate remained at 67 per cent while the employment to population rate was steady at 64.3 per cent for May.
EY Oceania chief economist Cherelle Murphy told Sky News the data made the case for a July rate cut as it showed Australia's labour market continued to be strong and there was little risk wages would be pushed up at a time when productivity remained low.
'Overall, the RBA will be pretty happy with this,' Ms Murphy said after the data was released.
'The economy really warrants another rate cut and that's because … both business investment and private consumption is running at fairly weak rates at the moment.
'The stance of monetary policy right now is restrictive ... it's actually slowing the economy down and that is not really appropriate for an economy where inflation is back under control and the private sectors not really spending.'
Following the release of the unemployment data, the odds of a rate cut when the Reserve Bank of Australia meets in July has dropped 1.5 per cent to 66 per cent.
Sky News' Business Editor Ross Greenwood said the shift was 'marginal' and the markets were 'not surprised' by the consistent unemployment rate.
'The odds are still in favour of the Reserve Bank cutting interest rates when they meet in just a little under a month's time,' Greenwood said.
The RBA has cut rates twice in 2025 and is likely to deliver further cuts beyond the July call.
It will also examine trimmed mean inflation – the middle 70 per cent of price changes in the consumer price index - which fell back into the RBA's 2-3 per cent target band in the March quarter.
This was the first time since 2021 trimmed mean inflation was in the RBA's target band.
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