17 Jun 2013
- Employment unexpectedly rose 1.1k in May on the back of a revised 45.0k gain in April. Looking through the volatility, job growth has been healthy. Over 2013 so far, monthly job gains have averaged 19.9k.
- The unemployment rate fell from a revised 5.6% in April to 5.5% in May, which was aided by a fall in workforce participation.
- Despite jobs growing a little faster than what we had anticipated, we expect that the pace of job growth will weaken to a more modest pace, given still subdued conditions and confidence among businesses. Additionally, a softer pace of job growth would correspond with the current soft pace of domestic demand. This would suggest that the unemployment rate will edge higher, but remain below 6 percent.
- State numbers point to jobs declining in Western Australia and job growth in the other States with NSW adding 55.6k jobs in the first five months of 2013, Queensland 26.3k, Victoria 17.4k and South Australia 10.5k.
- We expect that today’s data will prevent the RBA from cutting rates as soon as next month. However, the soft pace of domestic demand and the limited impact of lower interest rates to date suggest to us that the RBA can afford more monetary easing. We expect that the RBA will cut rates by another 25 basis points in August, after confirmation that inflation is well contained
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