FXStreet (Barcelona) – Reviewing the Australian labour market data release, Economists at ANZ note that the strength seen in today’s job employment numbers is at odds with most other indicators which are suggesting that economic growth remains below-trend.
Key Quotes
“Employment growth of 42k was far above market expectations of a 15k increase. Although the April result was revised down to -13.7k (from -2.9k), the overall result of today’s data is very positive. The economy has now added 115k jobs in the past four months, which has pushed annual employment growth to 2.0%.”
“The participation rate remained unchanged at 64.7%, while the unemployment rate fell to 6.0%, which is the lowest level in a year.”
“The increase in employment was spread across both full-time and part-time jobs. Although full-time employment rose by 14.7k, this was not enough to offset a large decline in the previous month. Part-time employment continued to rise strongly, and is still increasing as a share of total employment, from already-record levels.”
“We have been surprised by the strength in employment over recent months, given that the economy continues to grow below trend and employment in the mining industry remains under pressure. Clearly, weak wages growth is helping to support better employment outcomes. Moreover, some indicators suggest that we may see further near-term strength in the labour market – the NAB profits index suggests employment growth could accelerate from here.”
“However, with growth set to remain below trend for the next year or so, it is difficult to see how the economy can continue to create enough jobs to absorb solid growth in the labour force, and we continue to expect the unemployment to trend higher. Our current forecast for a peak of 6½% may, however, be too high given the starting point is now lower.”
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