RBA: Underemployment Lower, Youth Unemployment Higher, Vacancies Trending Down
The RBA looks beyond headline employment and unemployment rate data to try and gauge labour market developments. In terms of the indicators it has said it monitors, underemployment fell in May and hours worked are recovering, while vacancies-to-unemployment is trending lower and the youth unemployment rate rose last month but remains close to its recent trend. The mixed data suggest that like the Q2 averages, there was unlikely a material shift in labour market conditions this quarter.
- The underemployment rate fell 0.1pp to 5.9% after it rose to 6% in April. It has been steady around 5.9% since December, while underutilisation has been around 10% all year and below the 10.5% 2024 average.
Australia underemployment vs underutilisation rates % 3-mth ma
- The youth unemployment rate rose 0.5pp in May to 9.4%, the highest since August 2024. The Q2 average to date is 9.1% up slightly from Q1’s 9.0%. The RBA sees it as a lead indicator of the labour market but the series can also be volatile.
- Hours worked were impacted by April holidays and severe weather events in Queensland and NSW. But they rebounded in May driven by full-time jobs to be up 3.1% y/y and 3-month momentum also turned.
- Vacancies continue trending lower with the internet vacancy-to-unemployment ratio returning to the historical average in May. SEEK job ads fell 0.3% m/m last month to be down 5.6% y/y and April applicants per job continued rising signalling solid labour supply growth. The Q2 ABS data prints on June 26.
Australia internet vacancies/unemployment
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GOLD: Correction Continues As Risk Sentiment Improves
Gold prices are down 0.5% to $3212.15/oz so far today as better risk appetite weighs. They rose 0.8% to $3229.61 on Monday supported by safe-haven buying following Moody’s US sovereign downgrade. US Treasury yields are little changed in APAC trading, while the USD index is range trading and flat.
- Bullion reached $3232.72 earlier today but then trended down to $3204.71. It continues to trade between initial resistance at $3259.5, 20-day EMA, and initial support at $3121.0, 15 May low. It is almost 2% lower this month as more conciliatory trade developments have helped improve the global growth outlook, but with US tariffs only delayed and not scrapped uncertainty remains high.
- Asian equities are rallying with the Hang Seng up 1.4% but the S&P e-mini down 0.3%. Oil prices are little changed with WTI around $62.19/bbl. Copper is 0.4% lower and iron ore approaching $100/t. Silver is 0.5% lower at $32.19.
- Later the Fed’s Bostic, Barkin, Collins, Musalem, Kugler and Hammack appear and the Atlanta Fed’s conference continues. The ECB’s Lagarde and Cipollone attend the G7 meeting, while Buch, Cipollone and Donnery speak. In terms of data, US May Philly Fed non-manufacturing and Canadian April CPIs are released.
JGBS: Very Poor Demand Metrics For 20Y Auction, Tail Longest Since 1987
The 20-year JGB auction delivered very poor results across key metrics. The low price underperformed dealer forecasts, which were set at 99.80 according to a Bloomberg poll. Moreover, the cover ratio decreased to 2.5007x from 2.9639x in the previous auction, and the auction tail lengthened dramatically from 0.34 to 1.14 – the longest since 1987.
- As noted in the auction preview, today’s offering featured an outright yield near its cycle high, approximately 5bps above last month’s level.
- Moreover, the 10/20 yield curve remained near its recent high, its steepest since 1999.
- As a consequence, this result is likely to be seen as significantly worse than the performance observed in the 30-year JGB auction earlier this month.
- Post-auction, the 20-year JGB has cheapened 6bps.
JGBS AUCTION: 20-Year JGB Auction Results
The Japanese Ministry of Finance (MOF) sells Y750.9bn 20-Year JGBs:
- Average Yield: 2.453% (prev. 2.349%)
- Average Price: 99.29 (prev. 100.69)
- High Yield: 2.540% (prev. 2.374%)
- Low price: 98.15 (prev. 100.35)
- % Allotted At High Yield: 80.8791% (prev. 40.8163%)
- Bid/Cover: 2.5007x (prev. 2.9639x)
