Employment rises 1.1k (DB and market at -10k), unemployment rate falls to 5.5% from an upwardly revised 5.6% last month (DB 5.5%, market 5.6%). Overall there is, in our view, limited ‘new’ information in the May labour force survey. The underlying trend in the labour market remains soft and consistent with the unemployment rate drifting higher over time. It is therefore consistent with a further easing from the RBA (our preference remains August or September). As for the more ‘bearish’ assessments of the economy that have become somewhat more ‘popular’ over the past few weeks; we think that trends in the labour market remain inconsistent with the economy either being in recession or likely to enter one over the coming months.
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Deutsche Bank