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The labour force data for May 2024 released by the Australian Bureau of Statistics (ABS) has shown the unemployment rate dropped by 0.1 per cent to 4 per cent during the month.
This followed an increase of 0.2 per cent in April, up from a revised 3.9 per cent in March.
In seasonally adjusted terms, the number of people employed rose to 14,355,600. The figures showed the number of unemployed people fell by 9,200, down from 608,100 in April to 598,900 in May.
The participation rate in May held steady at 66.8 per cent, unchanged from the previous month, however, despite the rise in employment, monthly hours worked in all jobs fell by 9 million, to 1,951 million, according to the ABS.
ABS head of labour statistics Bjorn Jarvis said the fall in unemployment was the result of more unemployed people than usual waiting to start work in April.
“Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs,” Jarvis said.
“While the total number of unemployed people fell by 9,000 in May, this followed a 33,000 increase in April. Unemployment was around 24,000 people more than in March, an average increase of around 12,000 people each month.
“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.”
RBA implications
Reacting to the data, Judo Bank economist Matthew De Pasquale said this month’s labour force figures highlight the “resilience of the Australian economy despite the extraordinary pressures on household incomes” brought on by inflation, interest rates and higher tax burdens.
“This figure adds to stronger-than-expected inflation, suggesting that the Reserve Bank of Australia (RBA) cash rate at 4.35 per cent will not be restrictive enough to get inflation back to target anytime soon,” De Pasquale said.
Additionally, Capspace managing director Tim Keith said the tight labour market will “keep up with pressure on wages costs and services inflation”.
“…which, along with the rising cost of rent and housing, will keep inflation elevated, which is likely to see the RBA keep rates on hold at its June meeting and for the remainder of this year,” Keith said.
“We believe that with the employment market remaining tight, and with no immediate signs of inflation falling below 3 per cent, the RBA is likely to keep interest rates on hold at its June meeting next week and in the months to come.”
ANZ senior economist Blair Chapman said that while the labour market continues to ease (albeit at a slow pace), the market remains relatively tight, supporting the major bank’s view that the central bank will be on hold until February 2025, followed by a “very modest” easing cycle of three 25-bp rate cuts in total.
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