Unemployment dip to stave off rate cut
A surprise fall in the May jobless rate could keep a July cut in the cash rate at bay but is not expected to reverse the projected rise in unemployment over the next few months.
The unemployment rate edged lower to a seasonally adjusted 5.5 per cent last month, as the economy added 1100 jobs.
The participation rate - the percentage of people working or looking for work - slipped to 65.2 per cent.
The April unemployment rate was revised up from 5.5 per cent to 5.6 per cent.
The dollar gained almost 1¢, rising from US94.38¢ just before the release to US95.22¢, before falling back to US94.39¢. It was trading at US94.79¢ late on Thursday.
The latest figures came just before the sharemarket dropped more than 0.5 per cent in half an hour of mayhem as part of a global rout. The market closed lower for the day, but was able to recover some of its losses.
Citi's chief economist, Paul Brennan, said fears that employment would fall sharply after April's gain of 50,000 positions were not borne out. But he said the new data continued to point to softness in the labour market.
"Full-time employment has been flat over the last four months, and the labour force participation rate remains below the levels of a year ago," he said.
The economy added 6400 part-time positions, but lost 5300 full-time ones.
The aggregate number of hours worked in May fell by 11.5 million to 1628.5 million. The employment-to-population ratio declined to 61.6 per cent from 61.7 per cent in April.
ANZ's head of Australian economics, Ivan Colhoun, said the trend growth in employment coupled with other job indicators suggested the jobless rate would continue to edge up," he said. "Overall, it's still not that strong. If you looked at hours worked, it's only up 0.6 per cent in trend terms over the year, and for the month they are below the levels of a year ago," Mr Colhoun said.
Meanwhile, the job search site SEEK reported on Thursday that new job advertisements had declined for the fourth straight month, falling by 3.2 per cent in May.
Job ads dropped off particularly sharply in Western Australia, where employment has been supported by the boom in mining investment. The jobless rate rose the most in seasonally adjusted terms in New South Wales, jumping 0.3 percentage points to 5.6 per cent. It lifted 0.1 points in Queensland and South Australia, but fell in Victoria and WA.
Mr Colhoun said that in trend terms, the economy was adding about 10,000 jobs a month, with about 8000 of them created in NSW.
HSBC's chief economist for Australia, Paul Bloxham, said the latest figures meant the Reserve Bank would not feel under pressure to ease the cash rate again at its next meeting on July 2.