Australian employment jumped past all expectations in May to drive the jobless rate to a one-year low of 6.0 percent, a brightening break in recent gloomy news that sent the local dollar over half a US cent higher. Thursday's figures from the Australian Bureau of Statistics showed employment rose 42,000 in May, well ahead of forecasts for an 11,000 gain. The jobless rate dropped a tenth of a percentage point to breach the floor of a 6.1 percent to 6.3 percent range that has held for an entire year.
Analysts voiced some caution on the numbers since they have been revised greatly in the past, and the ABS did note that its survey for Western Australia produced some very odd results. Yet taken at face value it should be welcome news for Reserve Bank of Australia (RBA) Governor Glenn Stevens who this week bemoaned a dearth of demand in the economy and opened the door to yet another cut in interest rates.
"As always there is volatility in the data, but what a sweet set of numbers," said CommSec economist Savanth Sebastian. "This is a result that should help to ease some concerns about job security. An improvement in confidence would certainly bode well for retail activity and broader economic growth." The RBA has been loosening monetary policy as the country exits an unprecedented China-driven mining investment boom and non-resources industries strain to fill the gap.
Markets are still pricing in around a 50/50 chance of a further cut to 2.75 percent by year end - to top up two 25-basis point cuts this year - in part because the local dollar remains stubbornly high. The currency was up at $0.7760 on Thursday in the wake of the better data.
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