SYDNEY: Australia’s unemployment rate dropped sharply in May allaying concerns about an economic downturn. Unemployment rate fell to a lower-than-expected seasonally adjusted 5.5% in May from 5.7% in April, the Australian Bureau of Statistics said Thursday. Economists had expected an unemployment rate of 5.7% in May. The number of people employed rose by 42,000, compared with an expected 10,000 rise. The number of people in full-time work increased by 52,100 in May, while those in part-time work fell by 10,100. The bureau said its seasonally adjusted workforce participation rate rose to 64.9% in May from 64.8% in April, and a consensus expectation of 64.8%.
The economy has added around 150,000 new jobs since January, the ABS said. The data supports the view that there is underlying strength in the economy even after Australian GDP grew at its slowest on-year pace since 2009 in the first quarter. The job-market data now comes into line with upbeat business surveys and strong forward-looking employment indicators. The Reserve Bank of Australia has its eye on the job market, but has indicated it will largely ignore the weak first-quarter GDP data, which was impacted by a major storm in Queensland, shuttering in coal exports. Interest rates have been held at a record low since August last year, and the RBA has indicated its preparedness to remain sidelined for some time yet as it allows inflation to rise slowly. The chief concern for the RBA is weak wage growth, which if it persists, will delay a rise in inflation back to within the RBA’s 2-3% inflation band.
