Brakes on job growth as economy idles
The Australian economy has shed the highest number of full-time jobs in 16 months amid continuing softness in the labour market, but near-term expectations of another Reserve Bank interest rate cut remain low.
The unemployment rate remained steady at 5.7 per cent in October, with 1100 jobs added to the economy, data released by the Bureau of Statistics on Thursday showed.
Full-time positions declined by 27,900, the biggest fall since June 2012, while part-time jobs rose by 28,900. The participation rate remained stable at 64.8 per cent, but is at its lowest level in seven years, driven in part by an ageing population, analysts said.
The Australian dollar lost a third of a cent, falling from US95.22¢ to US94.96¢. It was buying US94.97¢ late on Tuesday.
"The economy is still not creating much in the way of new jobs," said National Australia Bank senior economist David de Garis.
"We've had net 4000 jobs in the past two months and what we've had has been all part-time."
Despite the softness in the October report, most economists said the RBA was likely to keep the cash rate on hold at a record low of 2.5 per cent, as the labour market was seen as a lagging indicator and the central bank had already factored in further near-term weakness.
Financial markets pared back their expectations of a rate hike by the middle of the year. Even so, markets were pricing in a less than 20 per cent chance of another easing move over the next few months.
"The RBA is unlikely to lower the cash rate further given rates are already very low, housing market activity is picking up strongly, and lags mean that cuts in the cash rate this year are still feeding through the economy," ANZ head of Australian economics Justin Fabo said.
RBA governor Glenn Stevens said in a statement on Tuesday following the central bank's decision to sit on the sidelines for another month that he expected the unemployment rate to edge higher in the near term as mining investment fell.
The aggregate monthly hours worked in October lifted by 6.2 million hours to 1.65 billion hours, which analysts said could eventually translate into an increase in hiring. At the same time, the seasonally adjusted employment-to-population ratio slipped to 61.1 per cent, the lowest since May 2005.
The jobless rate rose in NSW and Victoria to 5.9 per cent. It lifted to 6.6 per cent in South Australia and to 4.4 per cent in the ACT.
The unemployment rate remained stable in Queensland at 5.9 per cent and the Northern Territory at 5.3 per cent. But it eased to 4.3 per cent in Western Australia and to 7.9 per cent in Tasmania.
The jobless data came as the October figures on the construction industry showed it expanded for the first time in three years.