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Australia Unemployment Rate 4.0% (consensus 4.0%) in May-24

- Australia's unemployment rate dipped to 4.0% in May 2024, reversing a third of April's rise, with employment increasing by 39,700 jobs, indicative of ongoing labour market resilience.
- Economic indicators reveal a dichotomy in recovery, with robust service sector performance (PMI Services 52.5) counterbalanced by manufacturing sector vulnerabilities (PMI Manufacturing 49.7) and tepid consumer spending growth (retail sales 0.1% m-o-m in April 2024).

Peak PMI Pace Probably Passing

• The PMIs probably peaked in the spring, with the US’s jump beyond its peers in May setting it up for a more substantial drop during the summer.
• Residual seasonality from the pandemic-corrupted adjustment factors will likely exaggerate the US payback as part of a softening global story.
• A summer downturn should support the re-emergence of dovish debate in the US, where we still expect a September cut. However, global policy only looks a little tight.

By Philip Rush

Australia Unemployment Rate 4.05% (consensus 3.9%) in Apr-24

- The unemployment rate in Australia increased to 4.05% in April 2024, surpassing the consensus forecast of 3.9% by returning to the highest level since January.
- That slackening occurred despite a surprisingly large employment increase of 38,500 in April, owing to faster labour force growth.

Australia RBA Cash Rate Target 4.35% (consensus 4.35%) in May-24

• The RBA held the cash rate at 4.35% amid ongoing but moderating inflation, particularly in the services sector, reflecting a cautious approach to ensure inflation returns to the 2-3% target range by the second half of 2025.
• Economic uncertainties, including persistent services inflation, global geopolitical risks, and the effects of previous rate hikes on consumption and economic growth, continue to influence the RBA’s policy decisions.
• The RBA maintains a flexible policy outlook, indicating that future rate adjustments will be data-driven and contingent upon evolving economic conditions and inflation trajectories, with a strong commitment to achieving its inflation target.