Australia's job market showed unexpected weakness in May, with a net loss of 2,500 jobs following April’s strong gain of 87,600. Despite the drop, the unemployment rate held steady at 4.1%, supported by a 38,700 rise in full-time positions and a 1.3% rebound in hours worked.
The Australian Bureau of Statistics noted that overall employment remains 2.3% higher than a year ago, surpassing the 10-year average growth rate. The participation rate edged down slightly to 67%.
Economists had forecast a 25,000-job gain for May, but many see the decline as a normalization after April's surge, rather than a sign of deterioration. Labour market strength continues to be underpinned by robust hiring in health and aged care, though private sector demand has also picked up recently.
Despite frugal consumer spending and subdued economic growth, wage growth has stayed moderate. Advertised salaries rose 3.6% over the year to May, though monthly growth slowed to 0.2% — the weakest since October.
Market pricing ahead of the data suggested an 86% chance of a rate cut in July. However, analysts are now divided, citing global uncertainty, rising energy costs, and the need to keep inflation expectations in check. Some see room for two rate cuts this year; others argue the latest figures offer no strong reason for immediate action.
Oxford Economics predicts the unemployment rate could rise to 4.5% by year-end, not due to layoffs but to slower hiring amid a cautious business environment. Nevertheless, the labour market remains a pillar of resilience as the Reserve Bank of Australia weighs further rate decisions.