Monthly jobs growth resembles a random zigzag that looks more like statistical noise rather than a reliable indicator of actual jobs growth. For example, the changes in employment for the last three months have been: +47,000, -14,000 and now +42,000 which is not credible.

On top of that the acceleration in annual jobs growth to 2% is contrary to the slowing trend in economic growth seen over the last year. As a result, we think it’s premature to conclude that the unemployment rate has peaked.

Australian jobs data for May was much better than expected.

• Employment rose 42,000 and is up a strong 2% year on year
• Part time jobs rose 27,000 and are up 4% year on year and full time jobs rose 15,000 and are up 1.2% year on year
• The unemployment rate fell to 6.0% from 6.2% and is down from a peak of 6.3% in January

While the unemployment rate fell last month, the next chart shows how much stronger the US jobs market now is relative to that in Australia. It’s a similar picture if those who want to work longer hours are included to give what is called the labour underutilisation rate. This fell to 14.5% from 14.9% between February and May but a similar measure in the US has it at 10.8%.

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