No Change to Australian Unemployment Rate in May Despite Job Market Tightening

A woman walks past an employee at a department store in Melbourne, Australia, on Oct. 28, 2020. (William West/AFP via Getty Images)

The Australian jobless rate remained unchanged at a nearly 50-year low of 3.9 percent in May despite over 60,000 people getting a job.

At the same time, the Australian Bureau of Statistics (ABS) reported the underemployment rate dropped to 5.7 percent, hitting the lowest level since August 2008.

Additionally, the participation rate, which represents the proportion of people in the working-age population that are in the labour force, increased slightly to a record high of 66.7 percent from 66.4 percent previously.

ABS head of labour statistics Bjorn Jarvis said the lift in employment in May marked the seventh consecutive monthly increase after Australian states and territories relaxed their lockdown restrictions in late 2021.

“Average employment growth over the past three months—30,000—continues to be stronger than the pre-pandemic trend of around 20,000 people per month,” Jarvis said.

Among the jurisdictions, New South Wales had the highest number of employed people at 4,260,800, while Western Australia’s jobless rate was the lowest, standing at 3.1 percent.

Although job advertising measurements showed that hundreds of thousands of jobs were open for application, a significant portion of them was unfilled because of a lack of skilled workers.

According to Australian Chamber of Commerce and Industry chief executive Andrew McKellar, businesses across the country were suffering from the second-worst labour shortages in the Organisation for Economic Co-operation and Development.

He also noted that small enterprises were hit by skyrocketing energy prices, relentless supply chain disruptions, and ballooning inflation.

Furthermore, Fair Work Commission’s decision to raise the minimum wage by 5.2 percent now adds more pressure to struggling businesses.

McKellar expected the minimum wage lift and a 4.6 percent increase to modern award wages to take $7.9 billion (US$5.55 billion) off the bottom line of impacted firms.

Meanwhile, Sean Langcake, the head of macroeconomic forecasts at BIS Oxford Economics, said that businesses’ ability to recruit workers or increase operating hours would be limited as the job market saw a very high level of participation rate and falling underemployment.

“This will add to wage pressures that have been emerging over the past few months,” he said.

“These data confirm the strength in the labour market persists, and we expect the (Reserve Bank of Australia) will lift the cash rate by 50 basis points in July, with more hikes to come after that.”