Extraordinary jobs report takes unemployment rate back to pre-COVID level

The May labour market data from the ABS has been released this morning and has exceeded even the most bullish of analyst’s forecasts. While employment had been expected to bounce back from a weaker April and be up about 30-31K, the unemployment rate was forecast to remain unchanged around the 5.5% level. What we actually saw has blown those projections out of the water!

Employment was up 115,200 (of which 97,500 were full-time positions). Despite a healthy rise in participation (to 66.2) this still translates to an unemployment rate at just 5.1%; its lowest level since Dec 2019. Employment now sits 1.0% (or 130,200 people) higher than at its pre-COVID peak. Results like these could hardly have been dreamed of a year ago and are further evidence that the economic and health responses to the pandemic have been highly effective; although future success may be hampered by the continued challenges around the vaccine roll-out and the opening of international borders.

Employment growth for the year is 8.1% and we have also seen a very strong bounce in hours worked which takes the hours worked per capita to 86.9 hrs (its highest level since May 2012!). Hours worked per capita are up 12.8% for the year to May.

In Queensland the data is also extraordinarily strong. Employment lifted by 32,300 (with 38,900 new full-time positions) , participation was up to 66.6 and the number unemployed fell by 17,600. The end result is an unemployment rate that drops from 6.1% in April to just 5.4% in May (we have to go back to April 2012 to find a lower rate in Queensland) and employment growth is at 12.0% for the year.  Hours worked also jumped and the per capita figure of 89.9 hrs is at its best since Aug 2013 and up 15.8% for the year.

With two months of post-JobKeeper data now under our belts it is clear that any effect from the removal of the support package was limited, and more than outweighed by the underlying return to strength in the labour market.

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