Judging by the strength of the labour market, the Australian economy is not as sluggish as other figures would have us believe.
Employment is in fact booming, especially compared to the state of play of retailing and housing.
And the economy continues to create jobs at a rate faster than most market forecasts.
Despite sluggish retail sales, falling home loan approvals, weak building approvals and a falling consumer and business confidence, employers gave jobs to another 26,900 people in May, more than most market estimates.
The news got market analysts all excited and shouting ‘rate rise looms’. Yeah.
Over 11.05 million people are now employed, according to the ABS, a rise of 2.6% from May, 2009.
The unemployment rate fell 0.2% to 5.2%, where it was a couple of months ago before revisions, and the number of people unemployed fell by 25,400 to 600,900, down 8.6% on a year ago.
Market forecasts were for 20,000 jobs and an unchanged rate of 5.4% in April (which was revised down to 5.3%, as was the March figure).
Employers added 36,400 full-time jobs, taking the number of full time jobs created in the last three months to more than 110,000.
Part-time jobs fell for a third straight month, with about 9,400 going last month, a classic sign of an economy gathering strength.
The ABS said the aggregate monthly hours worked increased 43.9 million hours (or 2.9%) to 1,574.5 million hours.
That was the first increase in a couple of months, which rebalances the equation of more jobs means more hours worked.
And the ABS said its seasonally-adjusted labour force under-utilisation rate was 12.2% in May, down 0.5 percentage points from February 2010 when the survey was last done, which points to more longer term unemployed or under-employed people getting work.
The bottom line from the figures is that there is still considerable strength in the economy and will go on driving the expansion over the rest of the year as the surge in our terms of trade kicks in.
The AMP’s chief economist, Dr Shane Oliver, said the strong jobs data for May have provided a welcome relief after a run of poor economic data lately.
"The continuing strong improvement in the labour market – with 141,000 jobs created so far this year of which 139,000 were full time – will help underpin household income growth and along with next month’s income tax cuts should help boost consumer spending going forward.
"While interest rates are likely to remain on hold for a few months as the Reserve Bank of Australia waits to access the impact of both the European public debt crisis and the interest rate hikes we have seen to date, the strong May labour market report reminds us that more interest rate hikes ultimately still lie ahead."
And finally where would you rather be?
In Australia with solid jobs growth and mixed growth in the wider economy at the moment as the RBA’s rate rises kick in, or in the US where unemployment remains well above 9% and everyone knows it is not going to fall for years to come, meaning interest rates will remain around 0% to 0.25% for months to come?
