Unemployment rate remains steady at 3.9%

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on June 16, 2022 Fact Checked
Unemployment rate remains steady at 3.9%

New data details the unemployment rate has remained consistent on April results, sitting at 3.9% for May.

Remaining stable, seasonally adjusted employment increased by 0.5% or 61,000 people in May.

Unemployment also increased by 8,000 people, with the participation rate increasing by 0.3 percentage points to a new record high of 66.7%.

Data published by the ABS was largely consistent with forecasts of ANZ economists, who flagged an unemployment rate of 3.8% and employment to grow by 60,000 people. 

ABS Head of Labour Statistics Bjorn Jarvis said the increase in the number of employed people in May followed a smaller increase of 4,000 people in April, which coincided with Easter, school holidays, impacts from floods and ongoing disruptions associated with the Omicron variant.

“The increase in May 2022 was the seventh consecutive increase in employment, following the easing of lockdown restrictions in late 2021," Mr Jarvis said. 

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

The underemployment rate fell 0.4 percentage points to 5.7% - the lowest rate since August 2008.

Further, the underutilisation rate which, combines the unemployment and underemployment rates, decreased 0.3 percentage points to 9.6% marking the lowest level in 40 years.

This data comes following the decision by the Fair Work Commission on Wednesday to increase the minimum wage by 5.2%.

ANZ Senior Economist Catherine Birch said Australia's unemployment rate was steady at 3.9% in May, but this masked a lot of strength elsewhere in the data.

"This continued strength in the labour market supports our view that the RBA will hike the cash rate a further 50 basis points in July," Ms Birch said.

"We are forecasting the unemployment rate to decline through 2022, reaching 3.3% by the end of the year.

"We don't expect the unemployment rate to start rising until late-2023."

AMP Chief Economist Shane Oliver said having the lowest unemployment rate in 48 years is good news - but the comparison to 1974 is not necessarily good given the stagflation that followed.

"The 1970s experience does highlight the need for the RBA to act quickly to make sure inflation expectations do not rise significantly because if they do it will be much harder to get inflation back down - and it now appears that they are well aware of that lesson," Mr Oliver said.


Image by Thomas Franke via Unsplash

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Jacob Cocciolone joined the Savings team in 2021 as a Finance Journalist. Driven by a passion for keeping Australians up to date with the latest financial news and trends, his areas of interest include financial technology, investing, property and motoring.

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