Australian employment rebounded sharply in May, offering a potential confidence boost for retailers and consumer tech sellers heading into the new financial year.

The latest Australian Bureau of Statistics labour force data showed employment jumped by 40,300 jobs in May, more than reversing April’s revised fall of 40,700 workers. The unemployment rate eased to 4.4%, down from 4.5% in April.

The result beat market expectations, with economists tipping around 32,500 new jobs and unemployment to fall to 4.4%.

ABS head of labour statistics Sean Crick said a backlog of unemployed people waiting to start jobs had eased in May, contributing to the employment lift and an 18,000 fall in the number of unemployed people.

Full-time employment rose by 5,000, while part-time employment increased by 35,000. Hours worked fell 1.1% in May after rising 0.9% in April.

For retailers, the stronger labour market could be good news, particularly if steady employment supports household confidence and discretionary spending on technology, appliances and consumer electronics.

But the figures also complicate the interest rate outlook. They come a day after rising trimmed mean inflation put fresh pressure on the RBA and retailers, with sticky underlying price pressures keeping the prospect of another rate rise in play.

Analysts had flagged May’s jobs data as a key test for the RBA, warning that unemployment at 4.4% or lower would keep tightening risks on the table.

The 40,300 jobs increase came near the top end of major bank forecasts, which had tipped a rebound of between 30,000 and 45,000 jobs as Easter-related distortions from April faded.

That leaves retailers facing a mixed outlook. Stronger employment could support consumer confidence and household spending, but a tighter jobs market can also keep wage and inflation pressures alive, reducing the chance of near-term rate relief.

The retail sector has already been under pressure from higher interest rates, cost-of-living pressures and cautious consumers, particularly across big-ticket technology, appliances and discretionary electronics.

The next major test for the RBA will be the June quarter inflation report, due on July 29, before its August rates decision.

Traders are still pricing in the possibility of another increase, with markets putting the chance of the cash rate rising to 4.6% at the August meeting at around 23%.

The figures come as Prime Minister Anthony Albanese told the CEDA State of the Nation conference that AI would reshape employment, saying not every existing job could be protected.

“Some jobs that exist today will not exist in 10 years’ time, but there’ll be new jobs,” he said.