The May jobs figures confirm what the Reserve Bank Governor Glenn Stevens suggested in his post meeting statement on Tuesday, the labour market is cooling.
And the May figures will delay a rate rise, the timing of which now depends upon the June quarter consumer inflation report due in late July, in time for the August RBA board meeting, as pointed out in Wednesday’s Air Daily.
That the Australian dollar fell a cent immediately after the news tells us the markets are going cold on the idea of a rate rise sooner rather than later.
It later recovered to trade well over $US1.06, having recovered most of the loss.
In fact the AMP’s chief economist Dr Shane Oliver believes the chances of a rate rise have eased until later in the year.
So don’t listen to all the upsurge in gloom and doom commentary that will now follow the second weak monthly report in a row from the Australian Bureau of Statistics, remember what the RBA Governor said:
“Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent.
"Most leading indicators suggest that this slower pace of employment growth is likely to continue in the near term.
"Reports of skills shortages remain confined, at this point, to the resources and related sectors.
"After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn."
And he was right with just 7,800 jobs created in May, all part-time thanks to 29,800 part-time positions being created by employers while full-time jobs shrank by 22,000.
Full-time employment at 8.027 million is now at a seven month low, while part-time jobs are at an all time high of more than 3.41 million.
Once again economists were left wanting with many forecasting 15,000 to 25,000 new jobs would be created.
The jobless rate remained unchanged for the month at 4.9%.
The ABS said that revisions for April raised the number of full-time jobs lost that month to 57,200, from a previously reported 49,100.
The number of part-times created in April was also increased in the May report to 29,800, up 1,900 from the 26,900 in the April report.
That boosted April’s job losses to around 27,400.
That was the biggest monthly drop since November 1991.
The drop means the economy has lost almost 80,000 full-time jobs in the past two months.
The ABS said the monthly aggregate hours worked series showed an increase in May, up 6.4 million hours to 1,601.1 million hours.
But April saw a fall of 14.7 million hours to 1,601.6 million, so the loss in thousands of full time jobs again in May should have seen a fall in the hours worked.
The ABS reported labour force participation rate in May of 65.6%, which was unchanged from April.
The ABS reported labour force underutilisation rate was 12.2% in May, up 0.2 percentage points from February.
Among the states, the unemployment rate fell to a seasonally adjusted in NSW of 4.9% from 5.1%. In Victoria the rate went the other way – rising to 5.1% from 4.7%.
In Queensland the jobless rate was flat at 5.2%, the same as in April, while in Western Australia it rose to 4.3% in May from 4.1%.
On Monday, the ANZ job ads index posted its largest monthly drop in more than two years, dropping 6.5% in May, after a revised 0.2% fall.
And the SEEK new job ads index, out yesterday, dropped 1.1% last month after a rise of 2.7% in April.
The ANZ job ads survey showed a big fall in internet job ads in May, a real sign of the emerging weakness in the labour market because over 94% of all jobs are now on the net.
