The federal election is expected to have boosted jobs and business confidence.
Thursday’s release of the May jobs data will be a key focus for Australia’s financial markets during a shortened trading week due to Monday’s Queen’s Birthday public holiday.
ANZ senior economist Catherine Birch said the election should have provided a significant boost to employment during the month, if historical trends held.
“During a federal election, additional workers are needed across the country for pre-polling, on election day (when most workers are needed) and for vote counting,” she said.
ANZ expects employment to have risen by 35,000 positions in May, pushing the unemployment rate back to 5.1 per cent, from 5.2 per cent in April.
Ms Birch added that if there has been a decline in the participation rate from April’s record high, May’s unemployment rate could have fallen to 5.0 per cent.
“However, the backdrop of deteriorating leading indicators and the distortion in the May data caused by the election suggest that this may be a temporary reprieve,” she said.
Ms Birch said the concentration of the Easter and Anzac Day public holidays in one week in April could have a slight dampening effect on employment growth in May, perhaps due to reduced hiring activity in late April.
The market consensus is for employment growth of 13,500 positions and the unemployment rate to remain at 5.2 per cent in May.
The Reserve Bank of Australia last week cut the cash rate to a record low 1.25 per cent and hinted at another move if the jobs market does not improve soon.
The rate cut helped boost the local share market, which finished the week 0.7 per cent higher.
Wall Street stocks rose sharply on Friday, with traders betting that slowing US jobs growth will give the Federal Reserve a reason to stimulate the economy with interest rate cuts.
The Dow Jones Industrial Average closed 1.02 per cent higher and the S&P 500 was up 1.05 per cent on Friday for their biggest weekly gains since the end of November.
Economists predict Tuesday’s National Australia Bank business survey for May will show a post-federal election bounce in confidence after the re-election of the coalition government.
Two consumer sentiment surveys – the Westpac-Melbourne Institute monthly reading and the ANZ-Roy Morgan weekly measure – will be released on Wednesday.
CommSec senior economist Ryan Felsman said both will be keenly observed for consumer reactions to the federal election result and the interest rate cut.