Australia’s economy has again bucked the gloomy global trend, with a surprising jump in employment in May.
The number of people in work rose by 39,800 in May, data released by the Australian Bureau of Statistics showed, blowing out of the water economists’ expectations of a flat month for employment.
But it wasn’t enough to stop the unemployment rate rising to 5.1 per cent, from 5.0 per cent in April, following a spike in the number of people entering the jobs market.
The participation rate, the percentage of the working age population either employed or looking for jobs, rose 0.3 per cent to 65.5, its highest level since October last year.
HSBC chief economist Paul Bloxham said the figures were a sign the Australian economy was performing better than many people believed.
“It’s more evidence that the Australian economy is still in pretty good shape,” he said.
Tasmania recorded the strongest jobs growth, with the unemployment rate falling from 8.1 per cent to 6.6 per cent while Western Australia continued to outperform the rest of the country with 3.8 per cent unemployment.
The jobs figures come a day after National Accounts data showed an unexpected jump in Australian gross domestic product (GDP) in the three months to March 2012.
Australia’s economy grew at 1.3 per cent over the quarter for an annual growth rate of 4.3 per cent.
By contrast the US economy grew by 2.0 per cent over the past four quarters, with the unemployment rate to 8.2 per cent in May.
Meanwhile, much of Europe remains in recession and even booming China has experienced a drop in its growth over the past six months.
Commsec economist Savanth Sebastian said that, although the jobs data was volatile, with Thursday’s figures showing a sharp downward revision on the number of jobs created in April, Australia was clearly outperforming most of the developed world.
“Comparing the job market in Australia with markets in Europe or the US is like comparing chalk with cheese,” he said.
“Australia’s job market remains healthy, supporting growth in the broader economy.”
Still, Mr Sebastian says the surprising strength of the jobs market and GDP won’t stop the Reserve Bank of Australia from cutting interest rates sharply over the coming months.
“The jobs data is unlikely to make waves at the Reserve Bank.
“Rather the central bank will be more focused on the current situation in the euro zone and even the slowdown in China.”
The RBA cut the cash rate 25 basis points to 3.50 per cent on Tuesday, following a 50 basis point cut in May, and futures markets are predicting another 100 points in cuts by the end of the year.
