SCOREBOARD: Peak unemployment?

-- The number of employed rose by 40,600 in September compared to my and the market forecast for -10,000. This is the largest increase since November 2007.

-- Moreover it was mainly full-time employment, up 35,400 following a 30,500 fall in August.

-- The participation rate rose to 65.2 per cent (from 65.1 per cent) with the unemployment rate slipping to 5.7 per cent from 5.8 per cent.

-- Also, the number of hours worked increased this month.

It's looking much more likely that the unemployment rate may be at or near a peak. I say that because this is the seventh consecutive month we've been around this level (including April's 5.5 per cent). Moreover there is no discernible move to shed labour (in sum, full-time certainly has fallen) and given the economy is on the path to glory I doubt very seriously it's about to start.

Fair to say today's 40,000 lift may need to be taken with some salt. The numbers have been very volatile after all. But, looking through the volatility we're seeing flat growth on average since the beginning of the year and a small positive for the last five months – not bad, not bad at all.

Yet it's not a booming market by any means. It's all very exciting following a rate hike and I hope it is a change in trend. But consider that in April 2009, full-time employment rose by 47,000 only to be followed by four months of falls averaging 27,000.



It's volatile – there is nothing to say today's 35,000 rise won't be followed by more weakness. Certainly the leading indicators suggest that. So the downtrend in full-time employment is still intact unfortunately.



Similarly there is some weird stuff happening on a state basis. The employment numbers weren't so strange – rising 6,000, 5,000 and 16,000 in NSW, VIC and SA respectively. But the state unemployment rates were wild, dropping to 5.6 per cent in NSW from 6.1 per cent – ditto VIC. Then on the jobless increase side, unemployment rose to 6.3 per cent from 5.5 per cent in QLD. WA and SA were less weird with unemployment rates of 5.8 per cent (from 5.4 per cent) and 5.7 per cent (from 5.8 per cent). Also don't forget that the ABS began to re-instate the full sample so that may be throwing things around.

Point I'm trying to make is, let's not get too excited just yet – we need more data. For the RBA I think they'll view this result with interest and it clearly increases the odds of two back-up hikes in November and December. But it's early days and I think the pace of tightening is still very fluid. For my money though I think November is a very good bet.