Australia’s jobless rate has remained steady, with the number of people dropping out of the labour market offsetting a fall in how many people are employed.
Unemployment remained unchanged at 5.8 per cent in May, beating economists’ expectations of 5.9 per cent, official figures on Thursday showed.
The total number of people with jobs fell 4,800 to 11.565 million in May.
But that was offset by a slight fall in the participation rate, which includes those in work, people looking for work or are ready to start work.
“The economy shed 5,000 jobs, which is disappointing, but at the same time we’ve had a fall in the number of people actively looking for work,” JP Morgan economist Tom Kennedy said.
“We’ve got the ageing population, people are retiring, leaving the labour force.
“There could also be disgruntled workers leaving the labour force, and we are also seeing young people staying in education for longer, going to university and TAFE instead of actively seeking work.
“Today’s data fits with the theme that the labour market is still a little bit soft, still losing jobs, and unemployment is likely to move higher as we progress through 2014.”
Full-time employment rose 22,200 to 8.068 million in May and part-time employment was down 27,000 to 3.496 million, seasonally adjusted figures from the Australian Bureau of Statistics showed.
National Australia Bank senior economist David de Garis said the recent drop in consumer sentiment would likely cause a small rise in the unemployment rate in the coming months.
“If that translates into lower spending by businesses and consumers that would reduce our economic growth rate, so obviously that’s on notice right now,” he said.
“We have seen the labour market indicators just wavering in the past month or so.
CommSec chief economist Craig James said the figures would allow the Reserve Bank of Australia to keep interest rates on hold for a while yet.
“We seem to have gone through the first stage of recovery with more part time jobs coming on and now we are starting to see more full time workers coming through and part time workers being converted to full time staff,” Mr James said.
“The jobs market is far from robust at present and the question is whether the federal budget and the warm autumn/winter weather is taking away the momentum from the economy.
“At this stage the RBA would be looking at the economy and saying, `at this stage, we can stay on the interest rate sidelines for a bit longer’.”
Mr James said getting people back into the workforce would be a challenge over coming years as the population ages.
“The fall in the participation rate does look as though the ageing population is starting to work its way through,” he said.
“That’s something that federal Treasury will need to focus on in coming months and years, trying to get more people into the workforce.”
