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Market expectations of a 10,000 job rise in employment in October proved to be unfounded, with an actual increase of just 1,100 jobs reported by the Australian Bureau of Statistics.
Highlighting continued weakness in the labour market, trend employment is now falling by 4,000 jobs per month.
Paul Bloxham, chief economist at HSBC, said the lack of recovery in the labour market would be a concern for the Reserve Bank (RBA).
“While on the one hand, a loose labour market will keep wages pressures and inflation contained, on the other hand, an upswing in the labour market is needed for growth to head back towards trend,” he said.
The unemployment rate has remained steady at 5.7 per cent (after September, it was revised up from 5.6 per cent), but this is due to a 0.5 per cent fall in the participation rate.
Shane Oliver, chief economist at AMP Capital, said employment data are a lagging indicator of the economy's strength and the softness recorded now is a reflection of weakness observed in the economy over the past year.
“With leading economic indicators like prices for houses and shares, housing construction approvals and business and consumer confidence on the rise, this suggests that jobs growth should start to improve sometime around mid-next year,” he said.
“As a result, while the labour market remains very weak it’s not weak enough to justify another rate cut from the RBA.
“Our view remains that the RBA will keep the cash rate at 2.5 per cent out to September/October next year when rates will start to go up,” Mr Oliver said.
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