Australia's jobs market continues to show resilience with unemployment steady at 4.1 per cent in May, despite a surprise fall in jobs.
Some 2500 jobs were lost from the economy, the Australian Bureau of Statistics reported on Thursday, despite forecasters tipping a gain in employment of more than 22,000.
After a surprise jump of 87,600 jobs in the economy in April, the fall in employment suggests some "payback" has taken place in the labour market, IG market analyst Tony Sycamore said.
Employment was still up by 2.3 per cent compared to May 2024, which was stronger than the pre-pandemic, 10-year average annual growth rate of 1.7 per cent, ABS head of labour statistics Sean Crick said.
"This fall in employment, combined with a drop in unemployment of 3,000 people, meant that the unemployment rate remained steady at 4.1 per cent for May."
The volatility in employment figures has not been reflected in the jobless rate, which has held within a tight 3.9 to 4.4 per cent range since March 2024.
The participation rate fell 0.1 per cent to 67 per cent.
"Together, today's numbers imply the labour market is continuing to gradually cool," Mr Sycamore said.
The Reserve Bank watches the labour market closely, given it is a key factor in the rate of price growth.
Mr Sycamore expects the RBA to lower interest rates by 25 basis points at its next board meeting in July, but the rates market marginally reduced its odds of a July cut to 63 per cent following the release.
Treasurer Jim Chalmers said low unemployment was one of the best defences against uncertainty in the global economy.
"While other countries have sacrificed much higher unemployment for progress on inflation, Australia has been able to preserve the gains we've made in our labour market at the same time as we've got inflation down and jobs up," he said.
Australia's unemployment rate has stayed below pre-COVID averages, despite elevated interest rates, in part because the labour market has been underpinned by strength in government-funded employment, such as in health and aged care.
But growth in market sector jobs - those not supported by government funding - has picked up in recent months, in keeping with a pick-up in private demand, said JP Morgan economists Ben Jarman, Tom Kennedy and Jack Stinson
"Rotation in employment growth from the public to private sector should improve allocative efficiency and help lift labour productivity growth," they said ahead of the release.
Meanwhile, population growth slowed to 0.3 per cent in the final three months of 2024 to 91,133, as net overseas migration dropped by a fifth.
Australia's population was 27,400,013 people on December 31, the ABS revealed.
Queensland and Western Australia were the only jurisdictions to experience positive net interstate migration, with NSW the biggest loser. More than 28,000 people fled Australia's first state for cheaper housing markets.