Australia’s jobs report for May is about to be released.
After two bumper months of job growth in March and April, economists expect the pace of hiring to cool in May.
Adding extra spice to this release, the ABS will release quarterly underemployment figures, providing an update on the degree of labour market slack that exists within the economy at present.
Given its implications for wage growth and inflationary pressures, and as a result the outlook for interest rates, it means today’s report carries the potential to be even more market moving than usual.
Here’s the state of play.
- In April, employment surged by 37,400, following an increase of 60,000 in March.
- It was the seventh consecutive month that an increase in employment was reported, and left the total number of Australians in work at 12.099 million, the highest level on record.
- Full-time employment decreased by 11,600 to 8,227,400 while part-time employment jumped by 49,000 to 3,871,900.
- Over the past year, employment grew by 192,000, or 1.61%, the fastest increase since July 2016.
- With employment growth strong and the participation rate holding steady at 64.8%, the unemployment rate tumbled 0.2% to 5.7%, leaving it at a four-month low.
- A steep decline in male unemployment drove the fall in the headline rate, sliding to 5.4%, the lowest level since February 2013. The female unemployment rate held steady at 6.0%.
- The total number of unemployed fell by 19,100 to 732,300 persons.
- Despite the lift in employment, the ABS reported that monthly hours worked fell by 4.3 million hours to 1.6595 billion hours. The decline was driven by a drop in full-time hours worked of 0.5%, partially offset by a lift in part-time hours of 0.7%.
- This took some of the gloss off the report, adding to concerns about the degree of labour market slack — that not being fully utilised — that exists within the Australian economy at present.
- In its June monetary policy statement, the RBA noted that while employment growth had “been stronger over recent months, growth in total hours worked remains weak” — a clear indication that the bank is monitoring this trend.
- Turning to today’s report, markets expect employment growth to slow from the levels seen in recent months.
- Of the 25 economists polled by Bloomberg, the median forecast is centred around an increase of 10,000. Individual forecasts range from a decline of 7,500 to an increase of 25,000, reflecting the volatility in the ABS’ seasonally adjusted figures.
- With the participation rate tipped to hold at 64.8%, the modest increase in employment is expected to see the unemployment rate remain at 5.7%.
- While those always garner plenty of attention, there’s a chance they may be superseded by the release of quarterly underemployment figures today.
- Underemployment largely captures those who are working part-time but who would like to work more hours, and is seen as a measure on slack within the labour market.
- When it was last released three months ago, it stood at 8.7%, equalling the record set in August 2016.
- Given the RBA is monitoring this closely, this figure, along with the split in full and part-time employment and the change in hours worked, could prove influential on the movements in financial markets in the aftermath of the release.
The May jobs report will arrive at 11.30am AEST.
Business Insider will have all of the details, and implications, as soon as it hits the screens.