Labour market results not likely to sway RBA decision: HSBC

The Reserve Bank of Australia’s (RBA’s) upcoming monetary policy decision is unlikely to be affected by May’s labour market figures released on Friday, according to commentary from HSBC.

The unemployment rate managed to steady at 4.1 per cent, remaining within the 3.9 to 4.2 per cent range for the 15th consecutive month, despite the market registering a small decline in job creation (-3,000).

This follows a particularly “volatile” few months for employment figures, in which February saw a sharp “and surprising” fall only to be recuperated by a strong spike in both March and April.

“The six-month rate of job creation has been +25k jobs a month on average, which is a touch weaker than the six-month average back in November 2024, which was 30k a jobs a month,” Paul Bloxham, Chief Economist, Australia, NZ & Global Commodities at HSBC, said.

“In short, abstracting from the noise, employment growth has continued at about the same average solid pace.

“The main result, as we see it, is that this average pace of job creation has been enough to keep the unemployment rate steady.

“Today’s print showed the unemployment rate at 4.1 per cent in May, the same as April. This continues a broadly steady track, with the unemployment rate between 3.9-4.2 per cent over the past 15 months.”

The figures also suggested the labour market is slowly treading back into tightening territory, with the underemployment rate now at 5.9 per cent – well below what it was this time last year (6.7 per cent) – and the youth (aged 15 to 24) unemployment rate increasing to 9.9 per cent.

Similarly, the number of hours worked surged by 1.3 per cent in May and 3.1 per cent year-on-year, indicating it is overtaking employment growth and “likely” GDP growth as well.

“We expect that today’s print will not shift the dial for the RBA, with the central bank likely to deem this as more of the same,” Bloxham said.

“The key things in focus will be the ongoing global developments, particularly, at present, the geopolitical developments in the Middle East.

“Locally, the next focus will be on the CPI indicator for May, which will be published on 25 June. We will be keenly watching this indicator for signs that trimmed mean inflation is headed towards the RBA’s own forecast, given that the April reading was on the high side.”