● The unemployment rate remained at 3.5% for the fourth straight month in May (Apr: 3.5%)

- Unemployed persons (-0.4% MoM; Apr: -0.3%): continue to decline for 22 consecutive months and the sharpest drop in two months.

- The number of unemployed persons fell to 584.6k (Apr: 586.9k), the lowest since February 2020 (525.2k). Additionally, the actively unemployed fell slightly to 470.4k (Apr: 471.9k), the lowest since April 2020 (459.8k).

● Employment growth expanded at a steady pace for 22-straight months (0.2% MoM; Apr: 0.2%), hitting 16.28m people, a record high

- Labour force: growth sustained (0.2% MoM; Apr: 0.2%), with the total labour force expanding to a record high of 16.86m persons (Apr: 16.84m).

- New job creation: expanded (28.1k; Apr: 28.4k) but at a moderate pace.

● Labour force participation rate remained at its record level in May (70.0%; Apr: 70.0%)

- The number of those outside the labour force declined further (-0.02% MoM; Apr: -0.03%), but at the slowest pace in three months, to 7.226m as more people returned to find work.

● Unemployment rate falls among advanced economies

- US: decline in June (3.6%; May: 3.7%) with 209.0k jobs added, despite the US Fed delivering a cumulative 500 bps worth of rate hikes since March 2022.

- AU: unemployment fell in May (3.6%; Apr: 3.7%) with 76.0k jobs added, and the national workforce expanded beyond 14.0m for the first time.

● Unemployment rate forecast remains at 3.5% (2022: 3.8%) and is expected to decline to 3.4% in 2024

- We expect the labour market will remain tight for the rest of the year, with the average unemployment rate forecasted at 3.5% (2022: 3.8%). This is mainly because the unemployment rate has remained steady for the last few months with sustained employment growth and a record level of labour participation rate bolstered by a resilient domestic demand.

- Against this backdrop, we have forecasted 2Q23 GDP growth to expand by 6.0% (1Q23: 5.8%). Nevertheless, on the back of an imminent global growth slowdown we project growth to be slower in 2H23 (3.6%; 1H23: 5.8%). Barring unforeseen circumstances, we maintain 2023 GDP growth forecast at 4.7% (2022: 8.7%).

Source: Kenanga Research - 11 Jul 2023