AUD/USD news: Can Australia rally after promising data released?

By:
on Jun 13, 2024
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  • This morning, Australia announced better-than-expected employment figures for May.
  • Australian employment surged by around 40,000 jobs in May, around 10,000 more than anticipated.
  • The numbers may spur hope that the embattled AUD will finally manage to rise against the US dollar.

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The Australian dollar has been losing ground lately to the USD, a trend which was exacerbated after the Fed communicated an even more hawkish interest rate policy stance for the US yesterday.

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Read more about the Fed’s interest rate decision and what it means

The AUD/USD price

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At the time of this article going to press, the Australian dollar was trading at around $0.67 to the US dollar, giving up gains of around 0.25% since the Fed’s announcement.

Yet the AUD has strengthened somewhat overall in the past month, rising 0.6% to the dollar overall in the last 30 days.

Fortunately, the nation saw other encouraging signs that Australian economy is rallying, thanks to new data coming in this morning, during the Asian trading session.

Employment rises in Australia

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Earlier today, the Australian Bureau of Statistics (ABS) published the country’s employment and unemployment figures for May 2024.

According to the ABS, Australia’s The seasonally adjusted unemployment rate fell by 0.1% to 4.0% in May. This was in line with market expectations, which expected around a 0.1% drop.

Employment, meanwhile, surged by around 40,000 jobs during May – sizably more than the reading of 30,000 which analysts were broadly expecting.

In trend terms, employment grew by 0.3%, which ABS pointed out was a faster growth than the 20-year pre-pandemic average of 0.2%.

Economy not out of the woods yet

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However, Bjorn Jarvis, ABS head of labour statistics, said that it’s quite time to start celebrating yet:

In April we saw more unemployed people than usual waiting to start work. Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs. While the total number of unemployed people fell by 9,000 in May, this followed a 33,000 increase in April. Unemployment was around 24,000 people more than in March, an average increase of around 12,000 people each month.”

In fact, Australia is not only still aiming to correct for a grim April macroeconomically, but it is also (unlike the United States) still struggling to return to pre-pandemic levels of economic activity.

“There are now almost 600,000 unemployed people, however, that is still nearly 110,000 fewer people than in March 2020, just before the pandemic,” said Jarvis.

As a result of the increase in employment and the fall in unemployment, the seasonally adjusted employment-to-population ratio remained at 64.1%, while the participation rate remained at 66.8%.

Australia’s labor market still tight

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According to Jarvis, Australia’s employment-to-population ratio and participation rate both continue to be much higher than their pre-pandemic levels. Together with elevated levels of job vacancies.

“This suggests the labour market remains relatively tight, though less than in late 2022 and early 2023,” he concluded.

AUD Reserve Bank of Australia USD Australasia Economic Forex