Australia’s unemployment rate remained at near-50 year lows as labour data from May showed that 69,400 full-time jobs were filled in the period.
The jobs data was stronger than expected and, coupled with wage pressure, could strengthen the resolve of the Reserve Bank of Australia to implement a 50 basis point rate rise in July to curb inflation. RBA governor Philip Lowe said this week that he expected inflation to hit 7 per cent by the end of 2022, double its expectation at the turn of the year.
The drop in unemployment was a hallmark of the election campaign as Scott Morrison’s incumbent rightwing government pointed to the 3.9 per cent rate as a sign of the strength in the economy. Anthony Albanese’s Labor party, which won the May election, has tempered that opinion by pointing to low productivity, low wage growth and high inflation as signs of trouble ahead.
The May labour data, while significantly ahead of expectations, did not result in a fall in the overall unemployment rate as more people sought to enter the workforce. Part-time roles declined by 8,700 but analysts at ING, the Dutch bank, said that should reverse in the coming months as new job seekers enter the market.
The tight labour market, coupled with the continued spread of the Omicron variant of Covid-19 which has caused absenteeism, has put pressure on companies in need of workers. The Fair Work Commission said this week that the country’s lowest paid workers would receive a 5.2 per cent pay rise from July as it upped the minimum wage.
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