• Full-time jobs fell by 5,400 after rising by 29,800 in May. Part-time jobs rose by 6,400 in May after rising by 15,200 in April. The unemployment rate eased from 5.6 per cent to 5.5 per cent in May. The participation rate fell from 65.3 per cent to 65.2 per cent.
• Youth unemployment fell from 15.7 per cent to 15.2 per cent – a 4½-year low.
• In the first five months of 2013 over 99,000 jobs have been created. Part time jobs have risen by 69,100 in first five months of 2013 – marking the biggest lift in a calendar year since 1986.
• The number of hours worked fell by 0.7 per cent in May to be down 0.2 per cent in over the year to May.
  Unemployment across states and territories: NSW 5.6 per cent (5.3 per cent in April); Victoria 5.4 per cent (5.8 per cent); Queensland 5.8 per cent (5.7 per cent); South Australia 5.9 per cent (5.8 per cent); Western Australia 4.9 per cent (5.3 per cent); Tasmania 7.3 per cent (7.5 per cent); Northern Territory 5.1 per cent (4.8 per cent); ACT 4.1 per cent (4.2 per cent).
• Victoria recorded the biggest job gains in May (up 11,400), followed by South Australia (up 4,700), Tasmania (up 2,700) and Queensland (up 2,400). Jobs fell in NSW (down 1,700) and Western Australia (down 700). In trend terms jobs fell by 300 in the Northern Territory but rose by 500 in trend terms in the ACT.

What does it all mean?

• If anyone had been wondering what was the true state of the labour market, they would certainly still be confused after the latest jobs result. While job losses at high profile companies continue to dominate the headlines, job numbers across Australia are still rising. In the first five months of 2013 over 99,000 jobs have been created. 
• A raft of companies has been telling us that it is hard to attract and retain the right workers. It is just that a small number of listed companies reporting job cuts dominate the headlines rather than the raft of small and medium-sized firms that are getting on with business and hiring new workers. The job market is healthy but becalmed, and consistent with the performance of the broader economy.
• The estimate of the unemployment rate probably has a better pulse on the economy. Jobs are being created but not at a pace to see a fall in the unemployment rate. It is likely that unemployment will rise over the next couple of months. The trend estimates provide the best guide to labour market conditions and they show a modest lift in the jobless rate from 5.5 to 5.6 per cent.
• The latest figures show that businesses are still more inclined to hire part-time workers and contract staff than take on full-time staff. Part time employment lifted by almost 70,000 workers in the first five months of 2013 – recording the biggest calendar year lift in 27 years. But that is likely to change towards the latter part of 2013, after the election and as firms get more confident about the outlook for their businesses and about the broader economy. The people getting jobs probably prefer full-time work to part-time work, but it still means there is extra spending power for retailers to tap.
• The surprising slide in youth unemployment over the past year has been nothing short of remarkable. Youth unemployment has fallen by over 2 percentage points to a 4½-year low in the just the space of seven months. Interestingly youth participation rates have only eased modestly suggesting that while some younger workers are opting to stay on in higher education more are managing to find jobs.
• Activity levels across the broader economy are only in the early stages of a recovery. Housing activity is crawling off a low base and retailers are enjoying modest improvement after a very tough trading period over 2012. But clearly the majority of employers are not out there culling existing staff. Rather businesses are in a holding pattern, awaiting an improvement in conditions and managing staff hours. Hours worked fell in the latest month and are down 0.2 per cent over the year.
• The Reserve Bank is well placed to cut rates again if it deems it is necessary. However it will require a further downturn in the domestic economy including a sharp rise in unemployment – an outcome that looks unlikely. Rather policymakers are likely to remain on the interest rate sidelines while continuing to talk down interest rates.

What do the figures show?

• Employment rose by 1,100 in May after rising by a revised 45,000 jobs in April (previously reported as a 50,100 rise in jobs). Economists had expected a 10,000 fall in jobs in May.
• In May, Full-time jobs fell by 5,400 after rising by 29,800 in May. Part-time jobs rose by 6,400 in May after rising by 15,200 in April. The unemployment rate eased from 5.6 per cent to 5.5 per cent in May. The participation rate fell from 65.3 per cent to 65.2 per cent.
• The number of hours worked fell by 0.7 per cent in May after rising by 0.6 per cent in April. Hours worked stand 0.2 per cent lower than a year ago.
• The annual employment growth rate fell from 1.4 per cent to 1.1 per cent in May. The working age population rose by 25,300 in May after lifting by a similar magnitude in April. The working age population grew by 1.81 per cent over the past year (the fastest rate in three years).
• Unemployment across states and territories: NSW 5.6 per cent (5.3 per cent in April); Victoria 5.4 per cent (5.8 per cent); Queensland 5.8 per cent (5.7 per cent); South Australia 5.9 per cent (5.8 per cent); Western Australia 4.9 per cent (5.3 per cent); Tasmania 7.3 per cent (7.5 per cent); Northern Territory 5.1 per cent (4.8 per cent); ACT 4.1 per cent (4.2 per cent).
• Victoria recorded the biggest job gains in May (up 11,400), followed by South Australia (up 4,700), Tasmania (up 2,700) and Queensland (up 2,400). Jobs fell in NSW (down 1,700) and Western Australia (down 700). In trend terms jobs fell by 300 in the Northern Territory but rose by 500 in trend terms in the ACT.

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• Employment is growing, but just shy of the growth rate required to offset new entrants to the job market. So unemployment is likely to drift higher, but not markedly. A steady job market will keep consumers in bargain-hunting mode, keeping downward pressure on retailer margins.
• The focus on part-time employment highlights the pressures being faced by the business sector. Trading conditions and profitability continues to be squeezed. In addition businesses are unlikely to focus on significant investment plans until the election is out of the way and confidence levels improve. As such the Reserve Bank looks set to maintain an easing bias. We are keeping another rate cut on the radar screen largely because of the downside risks to domestic growth and a subdued inflation environment. 

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