Unemployment rate holds steady at 4.1%

New data released by the ABS has revealed that the adjusted unemployment rate remained at 4.1 per cent in May. After seeing an employment surge of 89,000 workers in the previous month of April, May saw 28,000 increase in employment, despite a 2,000 drop.

“Despite employment falling by 2,000 people this month, it’s up 2.3 per cent compared to May 2024, which is stronger than the pre-pandemic, 10-year average annual growth of 1.7 per cent,” said Sean Crick, ABS head of labour statistics.

“This fall in employment, combined with a drop in unemployment of 3,000 people, meant that the unemployment rate remained steady at 4.1 per cent for May.”

According to the data, the employment-to-population ratio fell 0.1 percentage points to 64.2 per cent and the participation rate fell 0.1 percentage points to 67.0 per cent.

“Despite the slight fall in the employment-to-population ratio this month, the female employment-to-population ratio rose 0.1 percentage points to a record high of 60.9 per cent,” said Crick.

The 4.1 per cent figure marks the 18th month in a row that the unemployment rate has been confined within a narrow range of 3.9–4.1 per cent.

“Other findings discovered that monthly hours worked rose by 0.1 per cent, which according to the ABS, has consistently been smaller than monthly employment growth since the beginning of the year,” said Crick.

“In trend terms, the employment-to-population ratio remained at 64.3 per cent in May, while the participation rate stayed at 67.0 per cent. Both measures have remained the same since the start of 2025.”

Speaking previously on the unemployment rate, Treasurer Jim Chalmers said that despite the economy still being under pressure, growth is occurring in various segments to combat cost of living.

“Under Labor, real wages are up, inflation is down, unemployment is low, incomes are growing, and we’ve had two interest rate cuts in three months,” Chalmers said.

“We know people are still under pressure, and that’s why this decision and our ongoing cost-of-living relief are so important.

“Boosting wages, cutting taxes for every taxpayer and creating more jobs are central parts of our efforts to help Australians with the cost of living.”

Monetary policy considerations

“The data will continue to take a backseat to economic and geopolitical uncertainty when the RBA meets in July,” said Indeed’s APAC economist Callam Pickering.

“The global economic outlook has recently soured and Australia’s major trading partners are at the centre of it. The RBA will need to cut rates at least another couple of times this year to provide sufficient support to households and businesses, while ensuring that the unemployment rate remains low and we avoid recession.

“We expect the RBA to cut rates again when they meet in July, with another cut in either their August or September meetings.”

This article was originally featured in Broker Daily sister brand HR Leader.

[Related: Unemployment up slightly, May rate cut ‘all but certain’]