People walk up a flight of stairs at Martin Place in Sydney, Australia. (Photographer: Brendon Thorne/Bloomberg)

Australia's Jobless Rate Falls to Lowest in More Than Four Years

(Bloomberg) -- Australia’s jobless rate unexpectedly fell in October as fewer people sought work, while full-time positions that have driven hiring this year extended their surge.

Key Details

  • Employment rose 3,700 from September; economists forecast 18,800 gain
  • Jobless rate fell to 5.4%, the lowest since February 2013; estimate 5.5%
  • Full-time jobs increased by 24,300; part-time employment fell 20,700
  • Participation rate declined to 65.1%; estimate 65.2%

Big Picture

Australia’s labor market and an improved investment outlook have been bright spots in an economy that’s otherwise struggling for traction. Heavily indebted households and meager wage gains are constraining spending; indeed, limited pay rises suggest there’s still plenty of spare capacity in the job market. The central bank has kept interest rates at a record low 1.5 percent for more than a year, and with inflation weak, there seems little chance of a near-term hike.

Australia's Jobless Rate Falls to Lowest in More Than Four Years

Economist Takeaways 

  • The economy “simply isn’t big enough to sustain employment growth of nearly 40,000 people a month, as was the case between March and September this year. So we weren’t surprised or alarmed by the weaker result,” said Callam Pickering at global job site Indeed, who previously worked at the central bank. “Nevertheless, there remains a high degree of slack across the labor market, despite recent improvements.”
  • “The 3,700 rise in employment in October fell short of the consensus forecast of an 18,000 gain, but this is not a big concern when employment has risen for 14 months in a row and the unemployment rate declined from 5.5% to 5.4%,” said Paul Dales at Capital Economics Ltd. “The recent disconnect between the strong labor market and weak retail sales and wage growth therefore remains.”

Other Details

  • Queensland state recorded only increase in employment, adding 12,600 jobs
  • Victoria state recorded biggest drop, losing 14,500 roles; Western Australia was next weakest after cutting 3,900 positions
  • Monthly hours worked in all jobs increased by 4.6 million hours or 0.3%
  • The island state of Tasmania posted the nation’s highest unemployment rate at 6.1%; New South Wales, the most populous state, recorded the lowest at 4.6%

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