| Consensus | Consensus Range | Actual | Previous | Revised | |
| Employment - M/M | 33,000 | 14,000 to 45,000 | 40,300 | -18,600 | -40.700 |
| Unemployment Rate | 4.4% | 4.3% to 4.6% | 4.4% | 4.5% | |
| Participation Rate | 66.7% | 66.7% | 66.6% |
Highlights
Australia's employment conditions improved in May, with the number of employed rebounding a higher-than-expected 40,300 on the month to 14.7 million after slumping 40,700 (revised down from a 18,600 drop) in April. The employment rate eased slightly to 4.4% following an unexpected rise to a seven-month high or 4.5% in April from 4.3% previously. The increase in May employment was largely due to a 35,200 gain in part-time positions to 4.6 million while full-time jobs rose 5,200 to 10.1 million.
In its June 16 policy decision, the Reserve Bank of Australia's nine-member board voted unanimously to leave the cash rate target unchanged at 4.35% after raising by 25 basis points at each of the previous three meetings. The board remains concerned about a spillover of high global energy costs to the prices for other goods and services. These increases are tough for households with mortgages who are also facing high inflation but they are necessary to slow demand, to make sure we get inflation down, Governor Michele Bullock told a post-meeting news conference.
Bullock said at the time that the unemployment rate is forecast to drift up to about 4.7% and that economic activity has to slow down in order to bring down the consumer inflation rate, which at 4.0% (4.2% in May) is still too high. The RBA board believes that the labour market is a bit tight and that there is still excess demand, she said.
Market Consensus Before Announcement
After a surprising 19K drop in employment in April (many blamed seasonal adjustment problems), jobs are expected to rebound by 33K in May. The jobless rate is also expected to retreat to 4.4 percent in May from 4.5 percent in April.
Definition
The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labour force.
Description
This report is used as an indicator of the health of the domestic economy. Employment trends highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.
The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.