Steady as you go on the job front

Labour force

• Employment rose by 17,900 in May after rising by just 900 people in April (previously reported as a rise in jobs of 10,800). Full-time jobs were unchanged while part-time jobs rose by 17,900. Economists had tipped a 15,000 increase in jobs.
• Hours worked rose by 1.7 per cent in May – best gain 16 months. Hours worked are up by 1.4 per cent on the year.
• Jobless rate: The unemployment rate held steady at a near 3-year low of 5.7 per cent in May (lowest since September 2013). The trend unemployment rate was steady at a 31-month low of 5.7 per cent. The participation rate was steady at 64.8 per cent.
• Unemployment across states in May: NSW 5.2 per cent (April 5.3 per cent); Victoria 5.8 per cent (5.6 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.8 per cent); Western Australia 5.7 per cent (5.6 per cent); Tasmania 6.5 per cent (6.3 per cent). In trend terms unemployment in the Northern Territory fell from 4.2 per cent to 4.1 per cent; ACT unemployment fell from 3.9 per cent to 3.8 per cent.

What does it all mean?

• There is no pleasing some people. The economy is growing at a 3.1 per cent annual pace – best for 3½ years – and people don’t believe it. Similarly, the jobless rate remains at a near 3-year low of 5.7 per cent and people don’t believe it. Still, trend data shows that the unemployment rate has been consistently improving over the past year and stands at 5.7 per cent, in line with the seasonally adjusted result. So it is no fluke – economic growth has picked up, and the jobless rate has come down.
• While job creation is concentrated in part-time positions, this is to be expected with an election underway. Businesses want to see the election outcome before they commit to taking on more workers. And encouragingly the number of hours worked posted the strongest gain in 16 months suggesting that the work is there – businesses are just meeting the extra demand by hiring temps and getting existing employees to work more hours.
• So no surprises in the jobs data. And that suggests the Reserve Bank will stay on the interest rate sidelines until August at which point it will have digested the latest inflation data.
• Arguably the NSW, ACT and Northern Territory job markets are at or near “full employment”. The $64 question is at what point wage pressures emerge, potentially injecting some inflation into the economy. If wage pressures emerge, they are more likely to emerge in construction markets.
• Employment by industry jobs data is released next Thursday.