SYDNEY (Reuters) -Australian employment outpaced expectations in May as firms took on more full-time workers, while the jobless rate dipped in a sign the labour market remains resilient to high interest rates and weak consumer demand.
The report is unlikely to move the needle much on rate cuts, with markets expecting the easing cycle to start in the second quarter of next year. The Australian dollar perked up to an intraday high of $0.6665 but soon settled where it was before at $0.6655.
Markets still imply just about a 50% chance of a cut in the 4.35% cash rate in December, having already moved earlier in the day after a slowdown in U.S. inflation revived hopes for an easing in policy there. They are fully priced for a 25-basis point cut in April next year.
Figures from the Australian Bureau of Statistics on Thursday showed net employment rose 39,700 in May from April. Market forecasts had been for a gain of 30,000. Full-time employment jumped 41,700 following a couple of soft months.
The jobless rate eased back to 4.0%, from 4.1%, in line with market forecasts, as more people returned to work after a break in April, the ABS noted.
The participation rate held at an historically high 66.8%, while hours worked dipped 0.5% in the month thanks to a large number of workers taking time off because they were sick.
“Together with elevated levels of job vacancies, this suggests the labour market remains relatively tight, though less than in late 2022 and early 2023,” said Bjorn Jarvis, ABS head of labour statistics.
The Reserve Bank of Australia had expected the jobless rate to gradually rise to 4.2% by the end of the year as employment lags behind growth in the labour force, and is keen to avoid deeper economic downturn by raising interest rates too far.
The economy came to a virtual halt in the first quarter, growing a meagre 0.1% as consumers reined in spending
Interest rates are already at a 12-year high but there are signs that inflation is proving hard to tame, with a monthly reading unexpectedly picking up to a five-month high of 3.6% in April after a surprisingly strong first quarter report.
(Reporting by Stella Qiu and Wayne Cole; Editing by Kim Coghill and Shri Navaratnam)
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