Labour Force Report

We got a blockbuster labour force report this month!

In May 2023: 
🔥 Unemployment was back down to 3.5%
🔥 Participation was up to 66.9% (a record 🎉)
🔥 75,900 more people found work
🔥 14,011,800 people were employed (a record🎉)
🔥 Underemployment was up slightly to 6.4%

Despite the slowing economy and interest rate pressure the labour market remains incredibly strong. We have a rapidly growing labour force, mostly fuelled by immigration, and jobs growth continues out outpace it. We saw a record number of Australians employed and a record participation rate in May, and we got this result with a relatively weak sample group rotating in.

These are not the labour force numbers we expect to see from a slowing economy, so they definitely increase the odds of further RBA rate increases in the coming months. That being said, while there are consistent sighs of labour force strength, we have been hovering around this level of unemployment since June last year with little sign of wage growth getting out of check, and strong immigration is preventing unemployment from falling further.

On balance, even with the records, I don't think this print will overly concern the RBA and they're most likely to keep rates at 4.1% next month.