The Australian economy added more than 10,000 new jobs in October, helping keep the jobless rate steady and lengthening the odds of another interest rate cut before Christmas.
New data out today showed that unemployment remained at 5.4 per cent, the same level it reached in September, as the jobs market bucked forecasts of a further rise in the unemployment rate.
Jobless rate remains steady
Chris Zappone reports on the latest unemployment figures as the rate for October is released.
The economy added 18,700 jobs full-time for the month, well ahead of expectations, but lost 8000 part time jobs, with a net gain of 10,700 jobs. But the participation rate – the share of the population in work or looking for it – also fell as job seekers gave up looking for work, helping to cap any rise in the official jobless rate. It's the second month in a row that more jobs were created than expected.
Economists surveyed by Bloomberg expected the jobless rate to rise to 5.5 per cent, continuing its gradual creep higher, and a net gain of only 500 jobs.
Stephen Walters, chief economist at JPMorgan, described the result as a ‘‘pretty soft outcome.’’ He said a rise of 10,000 jobs would typically would see unemployment rise, but the only reason it didn't was because the participation rate dropped.
"We think we'll only get modest jobs growth in the period ahead and that means unemployment has further to rise, and probably means the RBA will be cutting rates some time in the next few months. We've got December, we think they'll be cutting at the next opportunity."
The Australian dollar welcomed the news, climbing more than a quarter of a US cent as investors raised bets that the RBA would not cut interest rates at its December meeting. Shortly after the release, the Aussie was at $US1.0427, up from $US1.0394 before the data arrived. The interest rate futures market slipped to show a 48 per cent chance of a move next month, down from 60 per cent before today’s figures.
State by state
In a potential sign that the slowdown in the mining sector is costing jobs, Western Australia’s unemployment rate rose from 4 per cent to 4.6 per cent, its highest level since July 2010.
This follows redundancies at iron ore miners including BHP Billiton and Fortescue Metals Group, which are being hit by weaker Chinese demand.
However, WA still has the lowest unemployment rate in the country behind the Australian Capital Territory and the Northern Territory. Victoria’s unemployment rate fell slightly to 5.4 per cent, while the NSW jobless was unchanged at 5.2 per cent. Queensland's jobless rate eased to 6.3 per cent from 6.3 per cent, while South Australia was steady at 5.6 per cent.
Tasmania posted the largest fall in unemployment, down to 6.7 per cent from 7.3 per cent.
Participation rate slips
A senior economist at JP Morgan, Tom Kennedy, said a fall in the number of people in the labour force had stopped the unemployment rate from climbing higher.
The participation rate fell from 65.2 per cent to 65.1 per cent in the month.
“If that participation rate had remained steady the we would have likely seen that unemployment rate tick higher,” Mr Kennedy said.
“The fact that less people were actively looking for work ... reduces the stress on the labour market.”
Despite the monthly rise in jobs, a senior economist at NAB, David de Garis, said the figures were consistent with "anaemic" employment growth across the economy. In the past year, the number of jobs created had increased by just 0.6 per cent, he said.
"It’s not presenting a dramatic deterioration in the labour market or a net improvement in the labour market," Mr de Garis said.
Despite the gains in October, employment growth was still only running at an annual 0.6 percent, well below the historical trend of around 1.5 percent.
Traditional big employers such as retail and construction have been shedding jobs, while manufacturing has suffered under a high currency and intense competition.
Construction alone lost 70,000 jobs in the year to August, with housing particularly badly hit, and policy makers are keen to see a recovery in this sector.
Indeed, when leaving rates unchanged this week RBA Governor Glenn Stevens reiterated the current boom in mining investment was likely to peak earlier than expected, around the middle of next year.
With Clancy Yeates, Reuters