Sydney, Australia – June 25, 2025 – A cut to Australia’s interest rates next month appears almost guaranteed after inflation data released today revealed a further easing of consumer prices. The annual inflation rate to May fell to 2.1%, the lowest it’s been as October 2024, down from
Australia’s labor market reveals a mixed picture, as the unemployment rate remains stable, yet employment slightly dips. This follows a surge in jobs the previous month, creating a complex scenario for economists and policymakers.
In May, the unemployment rate held firm at 4.1% for the fifth consecutive month. Despite this stability, the number of employed individuals decreased by 2,500. Simultaneously, the count of unemployed people fell by 2,600.
As both employment and unemployment figures decreased, the labor force contracted by approximately 5,100 individuals. The participation rate saw a slight decrease, dropping 0.1 percentage points to reach 67%.
“The drop in jobs does not reflect a sudden reversal of the labour market’s fortunes. Instead, part of the fall reflects normalisation following exceptionally strong growth in April,”
—Kar Chong Low, Economist, Oxford Economics Australia
Economist Callam Pickering from Indeed describes the May figures as “somewhat disappointing.” However, he also urges against overemphasizing the slight employment decline, given the prior strong gains. Kar Chong Low from Oxford Economics Australia agrees, stating he’s not worried by the recent drop.
Australia’s job market has added roughly 329,100 jobs in the last year, outpacing the growth of the working-age population. According to the Australian Bureau of Statistics, the number of unemployed people is at 595,000 in April 2024. (ABS)
Independent economist Saul Eslake notes a decrease in the monthly growth of the civilian working-age population. This marks the lowest population growth since late 2021, when international border restrictions were still in place.
Mr. Eslake suggests the recent employment numbers are unlikely to significantly affect the Reserve Bank’s upcoming interest rate decisions. The RBA’s next Monetary Policy Board meeting is scheduled for early July.
Looking ahead, Mr. Pickering suggests that hiring plans can change quickly due to economic uncertainty, and businesses may face challenges navigating the global economic environment.
