Australia employment rose 42.3k in May, well over expectation of 16.0k. However, the growth was mainly driven by 39.8k addition in part-time jobs. Full-employment rose merely 2.4k. Monthly hours worked in all jobs also decreased by -0.3%. Unemployment rate was steady at 5.2% , above expectation of 5.1%. Participation rate rose 0.1% to 66.0%.
In seasonally adjusted terms, the largest increase in employment was in New South Wales (up 38.5k), followed by Victoria (up 28.6k) and Queensland (up 7.8k). The only decreases were in Western Australia (down -4.0k) and Tasmania (down -0.4k).
The data suggests that there is still considerable slack in the labor market. According to recent comments from RBA Assistant Governor Luci Ellis, unemployment could need to be pushed down to as low as 4.5% before material uplift in wage pressure and inflation. There’s still a long way to go for the central bank, which is on track for more rate cuts this year.
AUD/USD drops sharply today, reaffirming the case that corrective recovery from 0.6864 has completed at 0.7022. Retest of 0.6864 should be seen next and break will resume larger decline from 0.7295.
AUD/USD’s break of 74.96 support confirms resumption of decline from 80.71. Outlook will stay bearish as long as 76.01 resistance holds. Next target is 61.8% retracement of 70.27 to 80.71 at 74.25. Sustained break there will pave the way back to retest 70.27 flash crash low.
