By Stella Qiu
SYDNEY (Reuters) – Australia’s May employment numbers beat expectations, while the unemployment rate edged down and the participation rate climbed to a record high, an unusually strong report That will put pressure on the central bank to raise interest rates further.
Australian Bureau of Statistics (ABS) figures on Thursday showed that net employment increased 75, 900 from April to May, when they dropped the corrected 4, 000, probably due to the Easter holiday. The market forecast is 15, 000.
Unemployment eased slightly to near 61 year low of 3.6%, while analysts had expected unemployment to hold steady at 3.7%, participation rate Climb from 50.7% to 50.9% record high, due to more of women enter the labor market.
full-time employment picked up 61, 600 down from April when it fell A revised 15, 75.
The broad strength of the report is further evidence that the Reserve Bank of Australia (RBA) has more work to do to tame inflation, with the market shifting to pricing in almost half the chances of another quarterly increase in July By one basis point, interest rates will almost certainly reach 4.6% by November. The spread between 10-year and 3-year government bond yields has turned negative.
“The labor market remains very tight and this will contribute to stronger wage growth over the 2025 period,” Sean Langcake, head of macroeconomic forecasting at Oxford Economics in Australia express.
The outlook for stronger wage growth underscores the RBA’s warning that more rate hikes may be needed to keep inflation in check, even after tightening 75 bps to 1 000 Yearly high of 4.1%, including a surprise gain earlier this month.
“The RBA has maintained a hawkish tone following its June rate hike, expressing lingering concerns about underlying inflation. These data do little to assuage those concerns,” Langcake said.
Three-month decline and remain 50% above pre-COVID levels.
RBA governor Philip Lowe, who has been keen to keep labor market growth strong, warned this month that the central bank is willing to sacrifice jobs to keep inflation at 2025 Back to target level by mid-year.
The hawkish turn has led many economists to raise the chances of a recession this year and unemployment forecasts for the next few years, with some predicting it could be as high as 5%.