Australia’s jobless rate has edged down to 4.4% while consumer spending has rebounded, suggesting the economy is not cooling enough to tame stubborn inflation.
Household expenditure jumped 1.3% in May, according to the Australian Bureau of Statistics, erasing a 1.1% fall in April.
Economists had expected only a 0.5% rise so the bounce is surprisingly strong.
Much of the extra cash went into hotels, cafes, restaurants and clothing, signalling that discretionary spending is still alive.
Behind the headline jobs number, the labour market also shows more resilience than many forecasters assumed.
The economy added 40,300 positions in May, comfortably above the 32,500 jobs economists had pencilled in.
Around 5000 of those roles were full-time and about 35,000 were part-time, pointing to broad hiring rather than a narrow surge in one segment.
Unemployment has risen over the year but at 4.4% it remains low by historical standards and still points to a tight jobs market.
Stronger household demand alongside low unemployment sends a challenging signal for monetary policy.
Spending growth in areas like hospitality and fashion usually weakens first when households feel under pressure, yet these categories are driving the latest increase.
Economists interpret that pattern as evidence that higher interest rates have not fully curbed demand, which can keep inflation elevated for longer.
AMP sees the combination of robust consumption and a still-firm labour market as a hawkish backdrop for the Reserve Bank, increasing pressure to keep tightening rather than cutting.
