Jobs data complicates Melbourne Cup RBA cash rate call: Craig James

The latest job figures provide more complications for the Reserve Bank, says CommSec chief economist Craig James.

September ABS data shows the unemployment rate rose from 5.1% to 5.4% in September as the number of people entering the job market outpaced the number finding work.

The participation rate rose from a near six-year low of 65% to 65.2%.

At the same time employment rose by 14,500 in September after a revised loss of 9,100 jobs in August (previously  down 8,800). Economists had only expected 5,000 jobs to be added.

"A surge in both job growth and the unemployment rate in the same month makes it more difficult to know what the true situation is.

"But looking across a raft of indicators, the best appraisal is that the economy is in a holding pattern. As such, rate cuts still remain on the agenda, but the size of job growth in the latest month does make it harder for the Reserve Bank to justify a rate cut in November," he says.

Professional services firm Grant Thornton took a less ambiguous reading of the employment data, saying the "significant rise in the unemployment rate during September ... not only represents a deterioration in the Australian labour market, but also important rationale for the Reserve Bank of Australia’s decision last week, to cut the cash rate by 25 basis points".

"Any further weakening in employment trends over the next few months could easily jeopardise the income side of the Australian economy. This is something which has played an important part in underpinning the internationally stronger than average economic performances of recent times," says Grant Thornton.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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