Employment in Australia surpassed forecasts in May as businesses hired additional full-time staff, whilst the jobless rate edged down in a signal the country’s labour market is resilient, despite the economic slowdown.

The report is not expected to significantly influence rate cut decisions, as markets anticipate the easing cycle to begin in the second quarter of next year. The Australian Dollar briefly rose to an intraday high of $0.6665 but soon returned to its previous level of $0.6651.

Net employment increased 39,700 last month from April, according to the latest data published by the Australian Bureau of Statistics (ABS) on Thursday. Markets had estimated a rise of 30,000, Reuters reports. Whereas full-time employment increased 41,700.

Furthermore, the jobless rate decreased to 4.0% from 4.1%, matching estimates, as more individuals started or returned to work after a break in April, according to the ABS.

The participation rate remained at a historically high 66.8%, while hours worked decreased by 0.5% for the month, attributed to a significant number of workers taking time off due to illness.

“Financial markets have given up much hope of rate cuts in Australia this year, so today's decent labour report won't have caused too much of a stir,” stated regional head of research, Asia-Pacific, at ING, Robert Carnell.

“In short, having hit a soft-patch at the end of 2023, the Australian labour market is currently ticking along at a modest pace. It wouldn't take a lot to tip it into a weaker trajectory, but equally, there is also some potential for upside and the net picture is more positive than negative.”

The Reserve Bank of Australia is set to meet next week and is widely forecast to hold interest rates at 4.35% for the fifth consecutive meeting. It had anticipated the jobless rate to gradually increase to 4.2% by the end of the year and aims to prevent a deeper economic downturn by avoiding excessive interest rate hikes.

Interest rates are already at a 12-year high, yet signs indicate that inflation remains challenging to control. In April, the monthly inflation rate unexpectedly rose to a five-month high of 3.6% following a strong Q1 report.