Australian unemployment drops to 4-year low

SYDNEY • Australian employment surged in May, led by a rebound 
in full-time positions, sending the jobless rate to the lowest level in more than four years. The currency surged.

Employment jumped 42,000 from April, when it climbed an upwardly revised 46,100; economists forecast a 10,000 gain.

Jobless rate fell to 5.5%, the lowest since February 2013; estimate was for a 5.7% drop. Full-time jobs rose by 52,100; part-time employment fell 10,100. Participation rate increased to 64.9% from 64.8%; the forecast was for a 64.8% rise.

The Aussie dollar jumped to 76.18 US cents (RM3.25) at 12:17pm yesterday in Sydney, compared to 75.89 cents prior to report.

Three straight months of strong job gains signal Australia’s labour market may be exiting a slow grind that’s been characterised by stagnant wages and fewer hours. The economy is adjusting to the end of a resource boom and the central bank has cut its benchmark rate to a record-low 1.5% in order to encourage firms to borrow and hire. The result follows a private report on Tuesday showing business conditions remain strong.

“The much stronger than anticipated rise in employment in May and the larger than expected fall in the unemployment rate will go some way to quashing growing talk of the chance of another interest rate cut by the Reserve Bank of Australia (RBA) later this year,” said Kate Hickie at Capital Economics. But the underutilisation rate “is still fairly elevated by recent standards”.

“One strong economic result is viewed with suspicion. Two strong results are viewed with cautious optimism. Three strong job results are viewed as confirmation of a very positive trend,” said Craig James at the securities unit of Commonwealth Bank of Australia. “The RBA certainly won’t be in a rush to lift rates. But rate cuts can now be taken off 
the table.”

New South Wales, the most populous state, led gains with 32,600 jobs, followed by the southeastern state of Victoria with 6,900.

The mining powerhouses of 
Western Australia and Queensland recorded declines in unemployment to 5.5% and 6.1% respectively.

Australia added 141,100 jobs in the three months through May, the biggest such gain since 2004. Hours worked rose by 1.9%, the biggest increase in 11 years.

The underemployment rate declined 0.1 percentage point to 8.8%; the underutilisation rate fell 0.4 point to 14.4%. — Bloomberg
PIC: p20 Aussie jobs