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Jobless rate hits six month low of 5.4%

Melissa Jenkins
The unemployment rate fell to a six month low of 5.4 per cent in May

Australia's jobless rate is at its lowest level in six months despite a fall in the number of people in full-time work in May.

The seasonally adjusted unemployment rate fell to 5.4 per cent, from 5.6 per cent in April, as employment grew by 12,000, figures from the Australian Bureau of Statistics show.

Most economists were expecting an increase of 19,000 jobs and an unemployment rate in line with April's 5.6 per cent.

Full-time employment fell by 20,600 jobs in May and part-time work grew by 32,600 jobs, while monthly hours worked in all roles dropped by 1.4 per cent.

The unemployment rate was last at 5.4 per cent in November 2017.

BIS Oxford Economics macroeconomics head Sarah Hunter said the data was disappointing, with full time employment hardly changed since the start of the year.

She said the unemployment rate dropped because of a falling participation rate - the number of people working or looking for work - which dipped 0.2 points to 65.5 per cent, the lowest level in three months.

"Fewer opportunities for work appears to be discouraging some people, leading to them dropping out of the labour force," Ms Hunter said.

Consumers will remain a weak link in the economy for some time, she said.

"Weaker employment growth, stagnant real wages and falling house prices together make for a challenging environment for households," Ms Hunter said.

Victoria fared the best of the states, generating 22,100 jobs, and its unemployment rate dropped to 5.1 per cent.

Queensland added 5,000 jobs, lowering its unemployment rate from 6.5 per cent to 6.2 per cent, and 2,800 jobs were added in NSW, taking unemployment down to 4.9 per cent.

Western Australia suffered the largest drop in employment, with 1,900 fewer people in jobs, though unemployment also fell to 6.4 per cent.

The ABS figures come as SEEK said it had 10.7 per cent more job ads in May, compared with the same month a year ago, with resources, government and defence among the sectors experiencing the best growth.