Australia’s labor market is set for a remarkably strong showing. The country isn’t the only one anxiously awaiting the May employment report, though. Job growth is expected to be strong as analysts forecast that Australia will add about 25,000 new job positions and keep Australia’s unemployment rate stable at about 4.1%. This measure indicates the continuing strength of the labor market, with the unemployment rate remaining unchanged since May 2024. The Australian Bureau of Statistics (ABS) expect to release the report later this month. We hope this report will provide important context for understanding the nature of today’s employment landscape.
This past April’s employment report came in very hot, with the economy adding a stunning 89,000 jobs. The breakout of this increase points to 59,500 full-time additions and 29,500 part-time roles, a sign that recovery has taken root widely across the economy. This expected increase of 25,000 jobs in May would continue this very encouraging trend, though at a much slower pace. The participation rate will remain unchanged at 67.1%. This indicates that a substantial portion of the population maintains a consistent and interesting ability and desire to continue participating in the workforce.
That next report will be especially important this time, given so much has shifted in the employment landscape. Beyond that, it will inform the RBA’s understanding of how these trends could affect their future monetary policy decision-making. Current forecasts suggest that the employment data will not significantly alter the RBA’s approach to monetary policy in the near future.
Positive Employment Trends
In other ways, the booming Australian economy could not look better over the last few months. This follows an unforeseen slump in job numbers at the beginning of this year. With February’s blue-collar bust making headlines and fears surrounding the future of work growing, the following months have demonstrated an impressive bounceback. The 89,000 jobs added in April give a further sign of this recovery, demonstrating a strong labor market.
Wage growth has been key to making the moment economically good. As of March, real average hourly earnings are up 3.4% over the previous year. Real median wages are up significantly. At the same time, they increased from 0.7% in the prior quarter to 0.9% in Q1 2025. Wage increases of this type are tremendously important to continuing strong consumer spending and economic growth.
“The unemployment rate had been around 4.1 per cent since the middle of 2024, while the underemployment rate had declined a little over that period. Employment had recovered from the surprising fall recorded in February.” – Source
Market Reactions and Predictions
As Australia prepares for the coming employment report, there are valuable lessons the market analysts can learn from its possible impact on currency valuations. As Valeria Bednarik noted, the AUD/USD has been trading near its last 2025 high of 0.6552. This proves that the bullish trend is still powerful.
The global economic landscape is changing dramatically, particularly as the US continues to pursue unilateral trade actions and exacerbate geopolitical rivalries. Consequently, the US Dollar is experiencing intense downward pressure. While this ultimately can be bearish for the Australian Dollar, any surprise upside in employment figures would provide chances at an Australian Dollar rally.
“Given concerns about US economic progress within the trade war and its involvement in the Middle East crisis, the US Dollar (USD) seems poised to remain under pressure.” – Valeria Bednarik
Analysts are counting on a bullish employment report to propel the AUD/USD pair to fresh peaks in 2025. They argue that it could even go as high as the critical level of 0.6600. On the other hand, a worse-than-expected report could trigger a wave of selling on the Australian Dollar as investors scramble to reprice their bets.
Future Outlook
As economic indicators continue to show our economy growing at a moderate pace, the outlook for Australia’s job market stays cautiously optimistic. This expected net job gain of 25,000 is a testament to the continuing recovery progress and resilience in many sectors rebound from pandemic long-term impacts. As wage growth continues to play its role in the strong consumer sentiment and spending, analysts are hopeful that Australia can build on this for the long haul.
Second, the RBA is clearly still in active mode of reconsidering its monetary policy stance. Stable unemployment numbers are all but certain to lead to a positive climate for further economic growth. The upcoming ABS report will be pivotal in shaping perceptions about Australia’s economic health and guiding future policy decisions.