So no more rate cut looms talk? The October jobs figures yesterday support the Reserve Bank’s caution on the economy and the transition from the investment boom.
And although the bank has an easing bias in its outlook (it will cut rates if it sees the need to), that is different, very different to what the jobs data, the retail sales, car sales, housing finance and building approvals figures are telling us – that the economy is going OK, sluggish, but not falling into a hole.
But the 58,600 extra new jobs last month and fall in the jobless rate to 5.9% (for the first time in 17 months) have changed the economic debate for now – even if there’s a restatement or two in coming months, which could happen given the volatility in this series in the past couple of years.
But a word of caution – you do have to take the October jobs figures with a grain of salt or so simply because of prior problems with the labour market series from the Australian Bureau of Statistics. In fact the outcome was a bit of what’s going on here?
Nearly half the number of jobs – more than 26,000 were found in Victoria, which seems a bit of an imponderable.
The outcome is much, much stronger than any forecast, which was for between 10,000 and 20,000 new jobs and the unemployment rate remaining steady on 6.2%.
Unemployment dives, can the numbers be trusted?
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September’s original reported figure of a loss of 5100 jobs was revised upwards to a loss of just 800 jobs, which is nothing in a labour market of more than 11.8 million people. The number of hours worked last month jumped a seasonally adjusted 1.2% to 1.66 billion hours. Most of the nearly-60,000 new jobs were full time.
Victoria had a hard to believe fall from 6.3% to 5.6% unemployment, seasonally adjusted, while NSW fell a comparatively tame 0.3 points to 5.5%. WA however, rose from 6.1% to 6.4% (understandable given the slide in mining activity and investment), while Queensland edged lower — 0.1 of a point to 6.2%.
The AMP’s chief economist Dr Shane Oliver reckons "There is a danger in reading too much into monthly jobs data as it can be quite volatile. For example in May unemployment similarly fell to 5.9% from 6.2% in response to a 50,000 jobs gain only to bounce back in subsequent months.
“Employment growth at 2.7% year on year has now also run well ahead of the growth suggested by leading jobs indicators such as the NAB Employment intentions survey.
“As a result a pullback in employment could be expected next month and just as we have seen on several occasions over the last year or so, it’s still premature to say we have seen the peak in unemployment,” he wrote yesterday.
The trend series, which smooths out monthly fluctuations, also showed a strong rise of 40,000, which was one of the largest seen for a while, but the trend unemployment rate remained steady on 6.1%. The seasonally adjusted participation rate rose 0.1% to 65%, the same as the trend participation rate which didn’t rise in the month.
The ABS itself strongly emphasised the trend numbers in its media release, and not the seasonally adjusted figures, saying, "Trend employment has increased by 260,500 since October 2014, contributing to an increased employment-to-population ratio over the year from 60.6 per cent to 61.1 per cent.
"The trend unemployment rate has remained relatively stable over the year, decreasing from 6.2 per cent to 6.1 per cent.”
Regardless of whether the numbers are reliable or not, they saw the Aussie dollar jump 1% to around 71.23 US cents – a real enough consequence for exporters and import-competing local firms.
