UOB’s Lee Sue Ann highlights that Australia’s unemployment rate dipped to 4.4% in May with a 40.3k employment gain, mainly in part-time jobs, and participation rising to 66.7%. However, she stresses that falling hours worked and higher underemployment signal weakening labour utilisation and a gradual loosening in labour market conditions beneath the resilient headline figures.

Headline resilience versus softer utilisation

"That said, the underlying details were less encouraging. Total hours worked declined by 1.1% over the month, while the underemployment rate ticked higher to 5.9%, indicating a deterioration in labour utilisation despite the rebound in headcount."

"The composition of job gains, skewed toward part-time roles, alongside softer hours worked suggests that firms remain cautious in expanding labour demand. In trend terms, the unemployment rate edged up to 4.4% (from 4.3% previously), reinforcing the view that labour market conditions are gradually loosening beneath the surface."

"Taken together, the latest labour market data reinforces the narrative of a gradual and uneven cooling in the economy. The resilience in headline employment reduces near-term downside risks, but the softer underlying indicators point to continued moderation in labour market momentum."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)