The Reserve Bank just got there with its October rate rise, backed up by November’s lift: the latest labour force figures from the Australian Bureau of Statistics show an economy gathering pace and regaining its job-creation momentum.
So forget media reports about the rise in the unemployment rate by 0.1% to 5.8% “underscoring the fragility of the economy’s recovery in the same month the Reserve Bank began raising interest rates”.
In fact while market forecasts for a rise in the unemployment rate back to 5.8% were spot on, their estimates for 10,000 jobs to be lost in October, were again wide of the mark.
The figures are also considerably at variance with the downturn in online and newspaper job ads last month.
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Jobs growth happened in the resource rich states of Queensland and Western Australia. NSW was again the laggard with a large rise back over 6% in the month.
The reality is that the Australian economy has created over 65,000 jobs in the last two months in a surge of employment not seen for over a year, but not enough to absorb both the growth in the work force and the ranks of unemployed.
The Federal Government reckons the unemployment rate will peak at 6.75% early next year, but if this rate of job creation continues until December, then you’d have to wonder if the rate won’t end up close to where it is now, perhaps at a peak of 6%.
So pencil in a December 1 rate rise from the RBA, with the market analysts and economists now to debate whether a rise of 0.25% or 0.50% will happen.
Seeing many of them were out of the ballpark on the jobs numbers, perhaps their forecasts for a rate rise might be equally wide of the mark.
The ABS said today that overall employment rose 24,500 to 10,831,600 with full-time employment up 2,900 to 7,590,800 and part-time employment 21,500 to 3,240,800.
In September, over 40,000 new jobs were created, weighted heavily towards new full time gigs.
The rise in part time employment is more typical of an economy recovering momentum and employers hesitantly adding to their employment numbers.
Unemployment rose 11,100 to 670,100, the highest since early 2002. The number of people looking for full-time work rose 3,500 to 501,100 and the number looking for part-time work was up 7,600 to 169,000. The participation rate remained steady at 65.2% and aggregate monthly hours worked fell 1.9 million hours to 1,521.1 million hours, according to the ABS.
That’s another sign that the job creation momentum is nowhere near full strength, but its approaching take-off.
Over the year from October, 2008, 17,000 extra jobs were created, but there was an extra 154,000 people unemployed, plus hundreds of thousands of others working shorter hours.
No other major developed economy can claim to have added jobs in the toughest year their economies have seen in over 50 years.
On a state by state basis, NSW was the worst performer with the jobless rate jumping sharply top 6.1% from 5.5%. Victoria was unchanged at 5.7%, Queensland saw a fall to 6.0% from 6.3%, WA, was down sharply from 5.7% in September to 5.0% last month, South Australia was also down, to 5.3% from 5.7%. Tasmania, the Northern territory and the ACT were all either down, or steady.