Unemployment rate remains at 4.1 per cent for three consecutive months as markets continue to favour July cash rate cut
The unemployment rate has remained at 4.1 per cent for three months in a row as it continues to sit near historic lows since the nation came out of the Covid-19 pandemic.
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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Perth Now
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The Advertiser
2 hours ago
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Labour market stays tight despite surprise drop in jobs
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Employment was still up by 2.3 per cent since May 2024, a rise bigger than the pre-pandemic, 10-year average annual growth rate of 1.7 per cent, bureau head of labour statistics Sean Crick said. "This fall in employment, combined with a drop in unemployment of 3000 people, meant that the unemployment rate remained steady at 4.1 per cent for May," he said. The volatility in employment figures has not been reflected in the jobless rate, which has held within a tight 3.9 to 4.4 per cent range since March 2024. The participation rate fell 0.1 per cent to 67 per cent. "Together, today's numbers imply the labour market is continuing to gradually cool," Mr Sycamore said. The Reserve Bank watches the labour market closely as it is a key influence on inflation. Mr Sycamore expects the RBA to lower interest rates by 25 basis points at its next board meeting in July, but the rates market marginally reduced the odds of a July cut to 63 per cent following the latest release. ANZ economists Aaron Luk and Adam Boyton said the labour market was tracking healthier in the June quarter than the RBA expected in its May forecast. But they expect the central bank to ignore some of the noise of the fluctuating employment growth figures. "The unemployment rate has averaged 4.07 per cent over the June quarter so far versus the RBA's forecast of 4.2 per cent," they said, while employment growth was also tracking higher than forecasts. "These aren't large differences, but they do show a better near-term labour market picture than the RBA's starting point in the May Statement on Monetary Policy. "That said, we suspect these data won't sway the market or analysts one way or another on the July RBA board meeting." Treasurer Jim Chalmers said low unemployment was one of the best defences against uncertainty in the global economy. "While other countries have sacrificed much higher unemployment for progress on inflation, Australia has been able to preserve the gains we've made in our labour market at the same time as we've got inflation down and jobs up," he said. Meanwhile, population growth slowed to 0.1 percentage points to 91,133 in the final three months of 2024, as net overseas migration dropped by a fifth. Alongside the slowdown in immigration, a recent recovery in dwelling approvals meant the pace of new housing entering the market was finally on track to meet growth in underlying demand, AMP economist My Bui said. Australia's population was just over 27.4 million people at the end of 2024, the bureau said. Queensland and Western Australia were the only jurisdictions to experience positive net interstate migration, while NSW was the biggest loser. More than 28,000 people abandoned the nation's first state for cheaper housing markets. A surprise fall in jobs will do little to further improve the prospects of a Reserve Bank rate cut as the central bank weighs up the impact of a tight labour market. Australia's unemployment rate held steady at 4.1 per cent in May, but 2500 jobs dropped out of the economy, the Australian Bureau of Statistics reported on Thursday. Despite the result confounding forecasts of a 21,200 gain in employment, economists don't expect the RBA to read too much into it as it followed a jump of 87,600 jobs in April. The fall in employment suggested some "payback" in the labour market, IG market analyst Tony Sycamore said. Employment was still up by 2.3 per cent since May 2024, a rise bigger than the pre-pandemic, 10-year average annual growth rate of 1.7 per cent, bureau head of labour statistics Sean Crick said. "This fall in employment, combined with a drop in unemployment of 3000 people, meant that the unemployment rate remained steady at 4.1 per cent for May," he said. The volatility in employment figures has not been reflected in the jobless rate, which has held within a tight 3.9 to 4.4 per cent range since March 2024. The participation rate fell 0.1 per cent to 67 per cent. "Together, today's numbers imply the labour market is continuing to gradually cool," Mr Sycamore said. The Reserve Bank watches the labour market closely as it is a key influence on inflation. Mr Sycamore expects the RBA to lower interest rates by 25 basis points at its next board meeting in July, but the rates market marginally reduced the odds of a July cut to 63 per cent following the latest release. ANZ economists Aaron Luk and Adam Boyton said the labour market was tracking healthier in the June quarter than the RBA expected in its May forecast. But they expect the central bank to ignore some of the noise of the fluctuating employment growth figures. "The unemployment rate has averaged 4.07 per cent over the June quarter so far versus the RBA's forecast of 4.2 per cent," they said, while employment growth was also tracking higher than forecasts. "These aren't large differences, but they do show a better near-term labour market picture than the RBA's starting point in the May Statement on Monetary Policy. "That said, we suspect these data won't sway the market or analysts one way or another on the July RBA board meeting." Treasurer Jim Chalmers said low unemployment was one of the best defences against uncertainty in the global economy. "While other countries have sacrificed much higher unemployment for progress on inflation, Australia has been able to preserve the gains we've made in our labour market at the same time as we've got inflation down and jobs up," he said. Meanwhile, population growth slowed to 0.1 percentage points to 91,133 in the final three months of 2024, as net overseas migration dropped by a fifth. Alongside the slowdown in immigration, a recent recovery in dwelling approvals meant the pace of new housing entering the market was finally on track to meet growth in underlying demand, AMP economist My Bui said. Australia's population was just over 27.4 million people at the end of 2024, the bureau said. Queensland and Western Australia were the only jurisdictions to experience positive net interstate migration, while NSW was the biggest loser. More than 28,000 people abandoned the nation's first state for cheaper housing markets.
Sydney Morning Herald
3 hours ago
- Sydney Morning Herald
Population growth is coming back to earth, but there's a sting in the numbers
People are leaving Australia in the highest numbers since the pandemic, easing population growth and delivering a boost to the Albanese government's attempts to keep control of immigration that have had mixed success to date. International student numbers have also started flat lining, which is taking pressure off overall migrant levels, although a growing backlog of people on bridging visas and large number of skilled workers who are seeking longer visas will keep challenging Labor's efforts. Fresh figures from the Australian Bureau of Statistics on Thursday showed 70,000 people left the country in the final three months of last year – the highest departure figures since the March quarter of 2020 when 88,500 people left the country as the pandemic struck. It comes on top of departure numbers of 65,000 in the September 2024 quarter, and 63,000 in the June 2024 quarter, which were already the highest since the end of 2020. Until then, departure rates had lagged. About 50,000 people left each quarter in the 2022-23 financial year while record numbers of people arrived in Australia at the same time, hindering the Albanese government's efforts to keep a lid on migration and exposing Labor to political attack. Former immigration department deputy secretary Abul Rizvi said the recent uptick in departure rates was good news for the government, albeit inevitable given how many people had arrived. 'The peak has passed [and] policy has to some degree done what it's supposed to do,' he said. Further relief has come from a relative stall in student numbers. There were about 673,000 student visa holders in Australia in the March this year, compared to 671,000 in March 2024 and 583,000 in March 2023. Rizvi said this signalled the original post-pandemic student visa boom was also coming to an end. But he cautioned that its flow-on effects were still being felt: many former students have moved onto bridging visas, temporary graduate visas or skilled worker visas, which are visa classes that keep growing.
