Australian economy bouncing back strongly

Data released this week have shown the Australian economy is rebounding faster than we had expected. While labour market data for May showed a further decline in employment, a fall in the participation rate constrained the rise in the unemployment rate. And more timely measures of employment show that we are past the trough for employment. We expect further rehiring in the coming months which means the unemployment rate has probably peaked. Meanwhile, retail sales rose above their pre-virus level in May which has caused us to revise up our forecast for consumption and GDP.