Australia’s unemployment rate eased last month as employers shrugged off rising costs including higher interest bills to keep adding to their workforces.

In May, the jobless rate was 4%, the Australian Bureau of Statistics said on Thursday. That was in line with economists’ predictions and was a slight drop from April’s 4.1%.

The economy added a net 39,700 jobs in May. Economists had predicted the tally of job gains to come in at about 30,000. Full-time roles, which cover 35 hours or more per week, rose by 41,700 in May. Part-time jobs fell by about 2000, the ABS said.

The labour market figures are among the most closely watched by the Reserve Bank as it tries to wring inflation from the economy while maintaining as many of the extra jobs generated since the Covid disruptions as possible.

Both the RBA and treasury have the jobless rate pencilled in for next month at 4% before rising to about 4.3% by June 2025.

Signs unemployment is rising too quickly would likely increase the chances of a near-term RBA interest rate cut while excessive jobs growth might prompt another cash rate rise to preclude a revival of inflation.

Belinda Allen, a senior CBA economist, estimates the Australia needs to generate about 40,000 extra jobs a month to keep up with the swelling workforce.

More to come.