SYDNEY: Australian employment rebounded in May while the jobless rate eased from four-and-a-half-year highs, data showed on Thursday, a sign of resilience that could support a further lift in interest rates if needed.
Separate data showed household spending bounced last month as travel returned to normal after the Iran-war-induced drop in April, suggesting consumer demand was holding up in the face of higher borrowing costs and fuel prices.
Figures from the Australian Bureau of Statistics showed net employment rose 40,300 in May from April, when it fell a revised 40,600. That was above market forecasts of a 30,000 bounce, though it was balanced by the sharp downward revision to April.
The jobless rate dipped back to 4.4%, from 4.5%, as expected, while the participation rate edged up to 66.7%.
"This is not the clean slowing signal markets were hoping for... For an economy that is supposed to be losing momentum, Australians are still working and still spending," said Russel Chesler, head of investments at VanEck.
"We remain data dependent, but our view is that there could be up to one more increase in this cycle."
The bounces in jobs and household spending were largely expected but there are signs of weakness as hours worked fell a large 1.1% in May and the job vacancies dropped 2.1% in the three months to May to mark the first decline since late last year.
The data did little to alter the near-term interest rate outlook. A move in August is still about 20% priced in, while there is about 12 basis points of tightening expected for the rest of the year, less than one quarter-point rate hike.
The Reserve Bank of Australia has raised interest rates three times this year to 4.35% to tame inflation, fully reversing the amount of policy easing implemented in 2025. Headline inflation ran at 4.0% in May, but the trimmed mean measure pushed higher to 3.6%, well above the target band of 2% to 3%.
The labour market was also judged to be a "bit tight". The RBA had expected the unemployment rate to tick higher to 4.7% by mid-2028. - Reuters
