Australia’s May jobless rate in surprise drop to 5.5pc
SYDNEY: Australia’s unemployment rate eased to 5.5 per cent in May, an unexpected fall that could see the central bank hold off on cutting interest rates next month.
Economists had tipped a jobless figure of 5.6 per cent, the same as the upwardly-revised April number.
But the amount of people employed rose 1,100, the Australian Bureau of Statistics said, compared with an expected fall of 10,000.
The Australian dollar gained half a US cent, jumping to 94.90 US cents from 94.41 immediately before the release of the data.
Prime Minister Julia Gillard trumpeted the low unemployment rate as proof that the economy remained resilient.
With national elections due on September 14, she said her Labor government would put “jobs first”.
“We did that during the global financial crisis and we are continuing to do that now by investing in the future, including investing in much needed public transport infrastructure,” she told reporters. “Jobs are valuable for families, you can’t make a life for your family without access to job opportunities.”
The bureau said the number of people in full-time employment fell 5,300 to 8.154 million in May, but part-time work was up 6,400 to 3.51 million.
Commonwealth Bank of Australia chief economist Michael Blythe said the figures showed the labour market was holding up well despite a softening in consumer sentiment and business confidence.
“Given where the leading indicators are, given the economy’s running below trend, these are all signals which say the unemployment rate should move higher, but it looks like it will be a fairly slow creep up,” he said. “The market was looking to these numbers as a smoking gun for a July rate move. This makes it look a lot less likely.”
RBC Capital Markets senior economist Su-Ling Ong said she still expected two rate cuts later this year. “You get month to month data that may increase or decrease the risk of a rate cut but it’s the outlook that is the key,” she said, adding that while jobs were mostly holding steady unemployment was expected to rise later in the year.
Australia’s central bank kept interest rates at a record low 2.75 per cent last week, adopting a wait-and-see approach to a lower Australian dollar and the impact of earlier cuts on the economy.
But it left the door open for further cuts to stimulate the economy as it diversifies away from the mining sector, with July tipped as a possibility before the May jobs numbers.