Unemployment rate unexpectedly falls

An unexpected fall in Australia's unemployment rate is a sign the economy is holding up quite well, but the jobs market could weaken in 2013.

Australia's unemployment rate fell to a three-month low of 5.2 per cent in November, from 5.4 per cent in October, figures released by the Australian Bureau of Statistics on Thursday showed.

The market had been expecting the rate to be 5.4 per cent in November.

Total employment rose 13,900 in November, beating market expectations of a 5,000 fall.

CommSec chief economist Craig James said the jobs figures were nice surprise in a week of weak economic data.

"The doomsters have got it wrong - again. More jobs created, more hours worked and fewer people unemployed," he said.

"While there are a number of high profile company failures and job losses, beneath the surface small and medium-sized business are still keen to put on more staff.

"The anecdotal evidence is that it is hard to attract and retain staff and today's jobs figures back up these observations.

However, Mr James doesn't expect big improvements in the unemployment rate in the months to come.

"While it is encouraging that employment grew, more forward looking indicators like job advertisements have suggested that further labour market gains may be more circumspect," he said.

The participation rate fell to 65.1 per cent in November, its lowest level in three months, from 65.2 per cent in the previous month.

JP Morgan economist Ben Jarman said the lower participation rate - people in work, looking for work or ready to start work - played a factor in the fall in unemployment.

He said one reason for the fall in participation was that a significant fraction of those out of work were self-employed in the construction industry, who may not declare themselves as unemployed because they don't have any projects on at present.

"Participation dynamics are still distorting the data, with further shrinkage in the labour force pulling the unemployment rate down," he said.

"Ultimately with a larger share of the population not working, per capita income and spending will continue to fall.

"We expect the underlying labour market weakness already in play to keep turning up in softer consumer spending data, which will pave the way for another rate cut in early 2013."

St George chief economist Hans Kunnen said the jobs figures showed Australia's economy continued to fare better than most of the developed world.

"The pace of employment growth has risen to 1.1 per cent over the year to October, the fastest pace in six months," he said.

"It may also signal to the Reserve Bank of Australia that its policy of easing rates over the past year is having an impact."

Mr Kunnen doesn't expect the RBA to cut the cash rate again at the first meeting of 2013 in February.

Any cuts after that would depend on how future economic data unfolds, he said.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9278+0.0016+0.17%
    AUDUSD=X
    0.5516+0.0003+0.06%
    AUDGBP=X
    0.6704+0.0008+0.11%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg