[HSC] Economist: 10–23 June
The week in review.
1. The Labour Market
The Australian economy added 42,300 new jobs in May, however, that was not enough to move the economic needle, with national unemployment remaining at 5.2%. More than 94% of the new jobs were part-time, with only 2,400 positions being added. Underemployment — people who are employed, but would like to work more — increased by 0.1% indicating that there is still substantial spare capacity within the market. On a positive note, labour force participation increased to a record high of 66%.
The lack of decline in the unemployment rate means the likelihood of another interest rate cut remains high, with the market fully pricing in two more cuts over the next by February 2020. This perspective was supported by the release of the minutes from the Reserve Bank’s most recent board meeting.
“Given the amount of spare capacity in the labour market and the economy more broadly, members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead.”
This revelation caused the Australian dollar to dip sharply to 68.4 US cents, which if maintained, will help boost the international competitiveness of Australia’s exports, boosting overall economic activity.
HSC Relevance
- Unemployment remained at 5.2% in May, above the rate consistent with full employment.
- Labour force participation hit a record-high of 66%, with a lot of the increase in recent years driven by greater female participation in the workforce.
Further Reading
This series of weekly articles aims to compile the important economic news of the week into bite-sized summaries with HSC-specific takeaways.
You can expect a new article every Sunday at 6pm!
