Australian employment growth likely to have remained strong in May

Growth of employment in Australia is likely to have remained strong last month in sync with the economy that continues to expand strongly. Also, the employment growth is expected to have been underpinned by the leadership of labor-intensive sectors in growth. Employment in Australia is likely to have grown by 18,000 in May as compared with April’s gain of 11,000.

The rate of employment is expected to have increased to 1.9 percent y/y in May, said Societe Generale in a research report. Nonetheless, the strong tilt towards part-time employment has recently boosted the employment growth in Australia. Part-time jobs have grown by 76,000 since the beginning of 2016, whereas full-time jobs have dropped by 50,000 since the start of this year.

This acute bias towards part-time employment is the actual underlying composition of growth in employment and thus the labor market is likely to move towards a more balanced picture. At the current participation rate, labor for growth is at 14,000 per month, given that the Australia Bureau of Statistics estimates the population growth at 22,000 per month. Therefore unemployment is expected to have dropped by 4,000, noted Societe Generale. However, this will be enough to push the jobless rate to 5.6 percent.

Participation rate is likely to have stayed at 64.8 percent; however, the risks are tilted towards a rise, given the labor market strength. Therefore, there are upside risks to the jobless rate as well, given the unrounded level of 5.72 percent in April, according to Societe Generale.