WEEKLY E-MAIL

18 June 2024

LATEST UNEMPLOYMENT DATA

By Rebecca Dhillon

Labour force data for May was released last week, with the seasonally adjusted unemployment rate falling by 0.1% to 4.0% according to the data from the Australian Bureau of Statistics (ABS). While the total number of unemployed people fell in May, this followed a significant increase in unemployment in April, leading to an average increase in unemployment to around 12,000 people each month over the last few months.

Source: Australian Bureau of Statistics

Employment growth in May was driven by full-time employment which increased by 41,700, with part-time employment decreasing by 2,100. This hasn’t been the trend over the last 12 months, where almost three-quarters of new jobs have been part-time positions. However, economists believe these numbers are consistent with the Reserve Bank of Australia (RBA’s) expectations regarding labour market conditions.

As a result of the increase in employment and the fall in unemployment, the seasonally adjusted employment-to-population ratio remained at 64.1% and the participation rate remained at 66.8%.

Bjorn Jarvis, ABS head of labour statistics said “the employment-to-population ratio and participation rate both continue to be much higher than their 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”.

Many analysts believe the unemployment rate will continue to rise in the months ahead, with the RBA forecasting the unemployment rate to be 4% by the end of June, rising to 4.3% by June next year in their recent Monetary Policy statement. Unemployment rising too quickly would increase the chances of a near term interest rate cut, while excessive jobs growth might prompt a cash rate rise.

The latest labour market data is likely to see the RBA keep rates unchanged at this week’s Board meeting. While some economists still believe interest rate cuts will start in November this year, ANZ’s economics team officially changed their forecast of interest rate cuts to start in February next year.

Rebecca Dhillon
Senior Para-Planner
Authorised Representative No. 453075

If you have any questions or comments, please email me at rebecca@gfmwealth.com.au

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