• The unemployment rate dropped to 5.1% in May, with the number of employed workers now sitting a full percentage point above pre-pandemic levels.
• Some 701,100 people now count as unemployed, 53,000 fewer than in April.
• The generally rosy figures will play into the Reserve Bank of Australia’s decision-making on interest rates, but many Auatralians are yet to see the benefits of falling unemployment.
• Visit Business Insider Australia’s homepage for more stories.

The unemployment rate fell to 5.1% in May, the Australian Bureau of Statistics (ABS) reports, with the number of employed workers jumping by 115,000 — a full percentage point higher than before pandemic restrictions set in.

The latest data, released Thursday, provides an unmistakably optimistic view of the labour market during Australia’s recovery from COVID-19 restrictions.

The unemployment rate dropped 0.4 points from April, bringing it below the March 2020 rate of 5.3%.

Some 701,100 now count as unemployed, 53,000 fewer than in April, and a colossal 215,400 fewer than in May 2020, when nationwide restrictions put a chokehold on major industries.

The uptick in employed Australians followed April’s downturn of 31,000, which correlated with the JobKeeper scheme’s withdrawal.

While the Treasury states nearly 60,000 jobs were lost when that $90 billion scheme wound down, the ABS continues to gesture at seasonal fluctuations over the Easter holidays as a major contributing factor.

The raw figures suggest there’s now broad reason for optimism, even without a national payroll subsidy keeping workers on the books.

The number of employed women alone grew by 69,000 in May, meaning helping to set a new record.

“The increase in female employment in May means that a higher percentage of women were in paid work than ever before – 58.8 per cent, 0.7 percentage points higher than the start of the pandemic,” said Bjorn Jarvis, the ABS’ chief of labour statistics.

Underemployment continues its downward trend, dropping 0.3 points to 7.4% over the month, while Australians clocked 25.2 million more hours at work than in April — leaving hours worked nearly 3% higher than pre-pandemic levels.

And while April’s drop in unemployment was linked to an overall fall in the participation rate — the number of employed and unemployed Australians, compared to the number of working-age citizens — May’s figures come despite the participation rate rising by 0.3 points.

The latest numbers are sure to catch the attention of the Reserve Bank of Australia (RBA), which sees a low unemployment rate as a prerequisite to any changes to the record-low interest rate.

The RBA has long stated it wants to see high levels of employment drive wage growth, kickstarting some manageable inflation, before it lifts the cash rate from 0.1%.

In its latest economic outlook, the RBA predicts the unemployment rate will hit 5% by the end of the year. Given the latest figures suggest Australia is far closer to that number than anticipated, it appears ANZ Insight’s in-house projections, which suggest the unemployment rate could hit 4.8% by the end of 2021, appear closer to the money.

If that comes to fruition, ANZ economists speculate the RBA will be pushed to bump interest rates up in 2023, not in 2024 as the Reserve Bank has forecast.

Of course, there are some caveats to this excitement. There is continual uncertainty over how thoroughly the absence of migrant workers is influencing unemployment statistics, and in the market, drops in unemployment are yet to translate to strong wage growth.

Meanwhile, the Fair Work Commission has resisted union pressure to bump the minimum wage by 3.5%, instead settling on a 2.5% increase, with many workers in the hard-hit retail and tourism sectors slated to wait for months before those changes are reflected in their payslips.

The flip side to today’s job figures is the Australian Council of Social Services’ claim that 1.38 million people received JobSeeker or Youth Allowance in May, suggesting not everyone is benefiting equally from the post-lockdown labour market boom.

But if you don’t look too closely at the fringes of the apparent jobs bonanza, it appears Australia’s jobs market is recovering far faster, and stronger, than many expected.

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