Australian jobless rate stabilises
The Australian economy added more than 10,000 new jobs in October in a signal that recent weakness in the national labour market may be stabilising.
New Australian data out today showed that unemployment remained at 5.4 per cent, the same level it reached in September, as the jobs market bucked expectations of a further rise in the unemployment rate.
The numbers are a stark contrast to New Zealand where unemployment figures also released today showed a shock rise to a 13-year high of 7.3 per cent.
Across the Tasman, 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 also fell as some job seekers gave up looking for work, helping to cap any rise in the official jobless rate.
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 today's steady jobless reading would not lead to another rate cut in December. A steady unemployment rate is less likely to lead to further interest rate cuts.
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 – the share of the population in work or looking for it – 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,” 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," de Garis said.