Australia’s employment report for May has just been released, and it smashed expectations.

According to the ABS the economy generated a whopping 42,038 jobs during the month, well above expectations for an increase of 15,000. 14,700 of those were full time while 27,338 part time. As a result of the labour force increasing by a smaller 20,100, the number of unemployed persons fell by 21,972.

Not only did the number of unemployed fall substantially, total employment jumped to 11,759,600, an all-time record high.

Here’s a chart showing the monthly change in employment, unemployment and the size of the labour market.

As a result of labour market participation decreasing by 0.1% to 64.7%, the only real weak spot to come from the ABS report, the unemployment rate plummeted 0.2% to 6.0%. Interestingly, had the it been 0.01% lower, the unemployment rate would have had the number 5 in front of it.

This chart shows the national unemployment rate, along with the monthly employment change.

Keeping with the positive theme of the report the number of hours worked increased by 2.2 million hours, or 0.1%, while labour market underutilisation, a gauge of underemployed workers (steady at 10.8%) and total unemployed slid 0.4% to 14.5%.

While still unacceptably high unemployment among those aged 15 to 24 years fell 0.1% to 13.4%. Having hit a multi-year high of 14.1% in January, youth unemployment has fallen for four months in a row.

Across the nation unemployment fell in most regions. New South Wales, Victoria and Queensland, the most populous states, saw unemployment drop to 5.7% (-0.2%), 6.0% (-0.1%) and 6.3% (-0.3%) respectively. In what will do nothing to enhance the credibility of the state figures unemployment in Western Australia plummeted by 0.5% to 5.1% (who said the mining boom was over) while that in Tasmania dropped 0.3% to 7.0%

Unfortunately, while the rest of the states saw unemployment fall, that in South Australia jumped 0.4% to 7.6%.

Well, what to make of this report. It is certainly spectacular on the surface with almost all metrics showing improvement during the month. However, is it too good to be true. Problems with the ABS labour force survey are well documented and many have already expressed doubts about it strength.

Time will tell.

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