Private Credit Weekly Insights, 20 June 2025

The latest ABS labour force data for May 2025 reflects a resilient but moderating labour market. The national unemployment rate held steady at 4.1% for a fifth consecutive month, while the participation rate also remained constant. Seasonally adjusted employment fell modestly by 2,500 jobs, primarily driven by a 41,100 decline in part-time positions, offset by a substantial 38,700 increase in full-time employment, a positive indicator of longer-term labour demand.​

Despite the modest decline in headline jobs, the data reflect labour market resilience rather than deterioration. The loss of part-time positions follows an unusually strong April result and is broadly viewed as a normalisation rather than a sign of emerging weakness. The strength in full-time employment indicates continued business confidence in long-term hiring. Overall, the labour market structure remains healthy, with a steady unemployment rate, stable underemployment, and increasing total hours worked. The female employment-to-population ratio also reached a record high in May, reflecting ongoing improvements in labour market inclusivity.

From a policy standpoint, the continued strength of the labour market reinforces the RBA’s cautiously optimistic stance. With inflation beginning to moderate and consumer confidence still subdued, the stability in employment supports growing market expectations of a potential rate cut in July, currently priced at an 80% probability. That said, the RBA remains firmly data-dependent, weighing persistent labour market resilience against lingering inflationary pressures before adjusting policy settings. This dynamic is particularly relevant given equity markets remain near all-time highs, despite elevated geopolitical risks and an uncertain global economic backdrop. Overall, May’s data highlights a labour market that remains stable and resilient, even as headline employment slightly retreats.

Source: Australian Bureau of Statistics, Labour Force, Australia, 19 June 2025

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