Australian labour market data (May): 42.3K headline Employment / 5.2% Unemployment vs 5.1% (AUD lower on that 0.1% miss)

• Aussie jobs disappointed with a miss in the unemployment 5.2% vs 5.1%.
• AUD/USD is lower on the details of the report as markets continue to expect the RBA to cut rates further.

The Australian Bureau of Statistics issued its Labour Force Survey for May. There were expectations leading into today's data that the federal election may well have helped boost employment in the month, contributing to a slightly lower unemployment rate.

"For May employment we expect an election bounce of +50k, skewed towards part-time as the Australian Electoral Commission (AEC) temporarily hires poll booth staff and vote counters. The July 2016 election saw a temporary jump of +73k part-time workers. A lift of +50k with an unchanged participation rate could see the unemployment rate dip again to 4.9% and put a nail in the July cut coffin,"

analysts at TD Securities argued.

However, wide-ranging estimates for jobs added ahead of the data fell in between 16,000- 35,000 jobs in May. For the unemployment rate, which is key, the market was looking for 5.1% vs 5.2% prior. 

Australian labour market data (May)

• Australian Unemployment rate May: 5.2% (est 5.1%; prev 5.2%). This is another disappointment for the RBA that is already on the path of lowering rates, and this will be a weight of the Aussie. 
• Australian Employment change May: 42.3K (est 16K  prev 28.4K). This was a big beat compared to market expectations, although, as described above, there were higher expectations.
• Australian Full Time Employment Change: 2.4K vs the prior -6.3K.
• Australian Part Time Employment Change: 39.8K vs prior was +34.7K.
• Participation Rate: 66.0% vs (expected 65.8%, prior was 65.8%). A jump here will have contributed to the big beat in the headline.

*Revisions to priors:

• Australian Employment Change May: 42.3K (est 16K ; prevR 43.1K ; prev 28.4K)
• Australian Full Time Employment Change May: 2.4K (prevR -0.3K ; prev -6.3K)
• Australian Part Time Employment Change May: 39.8K (prevR 43.4K ; prev 34.7K)
• Australian Participation Rate May: 66.0% (est 65.8% ; prevR 65.9% ; prev 65.8%)

National Australia Bank Limited revises down near term economic forecasts

On the Aussie economy as a whole, analysts at NAB have revised down our near term economic forecasts:

"This reflects the inclusion of the Q1 national accounts, but more importantly continuing weak consumer demand in Q2 as well as further weakness in the construction cycle. That evidence comes both from our Business Survey for May and internal NAB transaction data. It is interesting to note that by Q2 2019 year to growth will be as low as 1.3% y/y% - with little contribution from underlying private sector demand."

"Not surprisingly that produces a weaker labour market outcome for 2019 – with unemployment rising to around 5.3% by year’s end. There is some risk that should growth be this weak, unemployment could deteriorate further."

AUD/USD outlook

With the resumption of a liquidity policy from the RBA, the aussie is likely to remain weak whatever the Fed does in the second half. The historical low for the Australian Dollar in 2001 and 2002 is still a long way to fall.

FXStreet's analyst Joseph Trevisani said in his preview.

About the Unemployment Rate

The Unemployment Rate release by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labor force. If the rate hikes, indicates a lack of expansion within the Australian labor market. As a result, a rise leads to weaken the Australian economy. A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish).