Jobs Rebound Masks a Shifting Tide

• Australia’s labour market steadied in May with the unemployment rate ticking down to 4.4%, unwinding April’s four-year high of 4.5% and landing exactly where the market expected.
• Employment was the standout – a gain of 40,300 jobs beat the 30,000 consensus, marking the strongest monthly rise since December after an upwardly revised loss of 40,700 in April.
• Many in the market read the softness as slack emerging, but for the RBA it is reassurance rather than a call to action – unemployment tracking above their own SoMP projections of 4.2% in Q2 and 4.3% in Q4 keeps the tightening case at bay, affirming the Board’s current watch-and-wait stance.
• Household spending rebounded 1.3% in May, fully unwinding April’s decline with annual growth lifting to 5.5%. Services led the recovery, discretionary outperformed, and goods added modestly.