Fin-X Rapid Response 25th June 2026

The ABS released the Labour Force survey, Job Vacancies and the monthly Household Spending Indicator for May 2026. Read together, paint a consistent picture: headline figures that look broadly stable, but detail that points to an economy losing momentum beneath the surface. Neither release is likely to move the dial materially on RBA rate expectations ahead of August. The Q2 inflation data will be decisive.

Labour Force & Job Vacancies

• The ABS reported the seasonally adjusted unemployment rate fell to 4.4% in May, down -0.1 percentage points from a 4.5-year high of 4.5% in April, in line with market expectations.

• On a trend basis, unemployment edged marginally higher and trend employment grew at +0.1% per month, the pace sustained since January 2025.

• The employment-to-population ratio remained at 63.8%.

• The composition of new jobs was skewed toward part-time: full-time employment rose by just +5,200 while part-time added +35,200 new roles.

• Sean Crick, ABS head of labour statistics, said: "The backlog of people waiting to start a job has eased in May, contributing to the 40,000 rise in employment and 18,000 fall in unemployed persons."

• The participation rate held at 66.7% (seasonally adjusted), effectively unchanged from April, and is down -0.3 percentage points yoy.

• Total hours worked fell -1.1% mom to 2,010 million hours, reversing most of April's Easter-distorted +0.9% rise. Mr Crick noted: "In April, less people took leave during the Easter holiday period and instead worked their usual hours, contributing to non-seasonal strength in hours worked. The fall this month brings hours worked back in line with employment growth since the end of the pandemic in June 2022."

• The underemployment rate rose +0.1 percentage points to 5.9%, pushing implied underutilisation to ~10.3%.

• Job vacancies fell by -2.1% to 329,500 in May 2026, according to new quarterly figures. Mr Crick added, "The decline in job vacancies was widespread, with falls across the public and private sectors as well as most states and industries."

• The Financial and insurance services industry had the largest quarterly percentage drop, at -21.4%. This was followed by Accommodation and food services, which was down by -16.1%.

• The largest percentage increases in job vacancies were in Manufacturing, up by +16.9%, followed by Information, media, and telecommunications, up by +9.6%.

Household Spending

• The ABS reported that household spending rose +1.3% mom (seasonally adjusted, current prices) in May, reversing April's -1.1% fall. Annual spending growth lifted to +5.5% yoy.

• The trend estimate of +0.3% mom is the cleaner signal. The headline rebound was heavily distorted by air transport normalising after flight cancellation refunds in April.

• Tom Lay, ABS head of business statistics, said: "Excluding air transport spending, which was impacted by travel-related refunds, total household spending would have risen 0.6 per cent."

• Services drove the monthly gain at +2.6% mom vs goods at +0.1%.

• Discretionary spending rose +2.1% mom (+5.6% yoy); non-discretionary spending fell -0.2% mom (+5.2% yoy).

• Hotels, cafes and restaurants rose +1.9%, supported by dining out and sporting and cultural events.

• Clothing and footwear rose +2.7%, driven by mid-year and end-of-financial-year sales discounting.

• Food purchases rose +1.1% mom.

• Fuel volumes fell an estimated -0.4% as the halved excise continues to pass through, though fuel spending remains elevated.

Market Reaction

• S&P/ASX200 8,775 -0.4%

• AUDUSD 0.6898 (unch)

• Aus 2yr 4.41% -4bps, Aus 10yr 4.72% -4bps

Fin-X Capital Group View

• The May rebound in both datasets is somewhat misleading.

• The employment gain was driven by a backlog of job-starters clearing (as the ABS explicitly flagged) rather than by fresh hiring activity. The broad weakness in job vacancies underlines this point.

• The household spending rebound narrows to +0.6% mom once air transport distortions are stripped out. The trend employment growth rate of +0.1% per month and trend spending growth of +0.3% mom are the more reliable signals, and both point to an economy that is growing but decelerating.

• The composition of today's data is more important than the headline. On labour, 87% of employment gains were part-time, hours worked fell -1.1%, and underemployment rose. On spending, non-discretionary demand fell and the gains were concentrated in event-driven and sale-discounted categories. Taken together, this is a picture of an economy where businesses are managing headcount cautiously and households are spending opportunistically - not a picture of strengthening underlying demand.

• Services resilience is the thread that connects both releases to the inflation outlook. Yesterday's CPI showed services inflation at +3.7% yoy, the highest in three months. The labour market data shows employment is still growing, supporting household incomes and sustaining that spending. Until services spending and services employment durably soften, services inflation is unlikely to fall quickly toward the RBA's 2–3% target. This remains the key channel through which a fourth rate hike could be justified.

• The RBA's hold in August remains our base case, but the data today does not close the door on a further hike. A Q2 trimmed mean above the RBA's +3.8% forecast would put a fourth hike back on the table.

• However, the minimum wage rises +4.75%, the fuel excise halving begins to unwind (lifting petrol prices), and electricity tariffs reset under the new default market offer. These three changes will simultaneously support nominal household spending, add to unit labour costs, and push energy prices higher, likely creating a noisy Q3 data environment. A clean read of the consumer sector is unlikely to emerge until the August or September household spending and CPI prints.

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