Another fall in the unemployment rate shocks market

Australia’s unemployment rate has fallen from 5.8% to 5.7% in September, despite predictions from economists that a sharp increase in job losses would push the jobless rate above 6%.

Official data from the Australian Bureau of Statistics shows a staggering 40,600 jobs were added in September, taking the number of employment to 10,805,600. Full-time employment increased by 35,400 to 7,589,800, while part-time employment increased by 5,200 to 3,215,800.

The number of persons looking for full-time work increased by 9,500 to 497,400, while the number of persons looking for part-time work decreased by 13,300 to 161,200.

The news has shocked economists, who had expected the employment rate would fall by 10,000 and the unemployment rate would hit 6%.

But on the surface at least it appears that Australia’s incredibly resilient economy has taken the market by surprise once again.

CommSec economist Sevanth Sebastian urged caution in interpreting the data, telling Sky News that it may take a few months for the true picture of the jobs market to become clear.

Last month employment fell by 27,0000, so today’s sharp rise again raises questions about the stability of the jobs data.

“The volatility of the data suggests that it might be a few months until we are out of the woods,” Sebastian says.

The big rise in jobs adds more weight to the RBA’s case for further rate rises. After lifting the official cash rate from 3% to 3.25% earlier this week, Sebastian expects further rises are just around the corner.

“This is a phenomenal result and the RBA has every opportunity to raise rates again. It’s a safe bet that rates will rise on Melbourne Cup day and you could even pencil in a rate rise in December.”

Currency markets certainly indicate that rates will soon be on the move again – the Australian dollar has crashed through the US90c mark, the highest point in 14 months.