Unemployment steady at 5.8pc as 22,200 full-time jobs added

Updated

Unemployment has remained steady at 5.8 per cent for the third month in a row, due to a fall in participation and a solid increase in full-time work.

Bureau of Statistics figures estimate that 22,200 full-time jobs were added last month, however 27,000 part-time positions were shed.

Overall, that means an estimated 4,800 jobs were lost, but the jobless rate remained steady because participation - the proportion of people in work or looking for it - fell from 64.7 to 64.6 per cent.

That participation rate is the equal lowest since March 2006.

Falling participation has pulled the employment-to-population ratio down to 60.8 per cent.

Economist forecasts centred on 10,000 jobs being added and unemployment staying steady at 5.8 per cent.

RBC Capital Markets senior economist Su-Lin Ong says the steady figures will reinforce the Reserve Bank's intention to keep rates steady for a while to come.

"The overall tone is one of a labour market that's mirroring to some degree the economy, which was strong late last year, early this year and momentum's eased a little in the second quarter," she told Reuters.

"It remains fairly consistent with ongoing slack in the labour market, which is clearly helping to temper the wages growth side and keep inflation under control."

The more stable trend unemployment rate, which smoothes out monthly volatility, remained steady at 5.9 per cent.

It is worth paying attention to the stable trend figures, as the employment figures are based on a survey, and the ABS says it is 95 per cent sure the actual unemployment rate for May lies somewhere between 5.4 and 6.2 per cent.

Seasonally adjusted hours worked rose 1.7 per cent last month, consistent with an increase in full-time work, and also probably some bounce back from a holiday-disrupted April.

The ABS also released quarterly estimates of underemployment, which estimate that 7.6 per cent of Australians over 15 are not getting as many hours of work as they want or need.

Combined with the 5.8 per cent of Australians unemployed, that means that 13.5 per cent of the nation's potential workers are what the bureau dubs "underutilised" - that is steady on the previous quarter's data.

However, UBS economists note that this is "only a tick below the highest level since the 1990s, hence indicating some slack remains in the labour market."

Economists say this is likely to keep wages growth around the very low levels that have been observed over the past year.

While that is bad news for the average worker who is currently seeing their income go backwards when compared to consumer prices, it is better news for borrowers because it is likely to contain inflation and keep official interest rates at record lows for longer.

State-by-state NSW: Unemployment up from 5.4 to 5.7 per cent; participation down from 63.2 to 62.9 per cent.

Vic: Unemployment down from 6.4 to 6.2 per cent; participation up from 64.1 to 64.4 per cent.

Qld: Unemployment down from 6.3 to 6.2 per cent; participation down from 66.5 to 66.3 per cent.

SA: Unemployment up from 6.2 to 6.8 per cent; participation down from 62.1 to 62 per cent.

WA: Unemployment up from 4.9 to 5 per cent; participation up from 68 to 68.2 per cent.

Tas: Unemployment steady at 7.5 per cent; participation up from 60.7 to 60.9 per cent.

NT: Unemployment down from 3.5 to 3.3 per cent; participation up from 76 to 76.2 per cent.

ACT: Unemployment steady at 3.7 per cent; participation down from 71 to 70.9 per cent. Source: ABS. All data seasonally adjusted, except Tasmania, NT and ACT which are trend, due to small sample size. Source: ABS. All data seasonally adjusted, except Tasmania, NT and ACT which are trend, due to small sample size.

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, unemployment, australia

First posted