Australia's unemployment rate fell from a 10-month high to 5.2 per cent in September, as employers hired more staff than expected.
Total employment rose 20,400 to 11,451,000 in the month, according to figures released by the Australian Bureau of Statistics today. Economists had forecast a 10,000 rise in employment and an unchanged jobless rate of 5.3 per cent.The Aussie dollar jumps on the jobs surpriseInterest rates tipped to stay on hold for monthsMichael Pascoe: Why the RBA won't be impressed
Leading the jobs surge was Queensland, where the unemployment rate tumbled to 5.4 per cent from 6.3 per cent in August. But it wasn't all good news, with the jobless rate jumping in South Australia and rising slightly in NSW and Victoria.
The dollar still soared on the news, jumping from $US1.015 before the data was released to $US1.0236 before settling at $US1.02 cents, as prospects for an official interest rate cut sink.
Mood shifts towards rate rise
ICAP Australia senior economist Adam Carr said the jobs growth in September showed the uptick in the unemployment rate in July and August were an aberration.
Growth of about 20,000 jobs in a month was more consistent with the larger trend in employment, he said.
"It's the final blow against those calling for rate cuts," said Mr Carr. "In the absence of a meltdown in Europe, the RBA won't be cutting rates."
Mr Carr said it was more likely for the RBA to lift rates eventually. "I think they will be hiking. The fact is, the Australian economy is doing pretty well."
The employment rise of 20,400 was made up of a rise of 10,800 in full-time employment, while part-time employment rose 9600.
The participation rate came in at 65.6 per cent, matching economists' expectation and unchanged from August.
"It's a pretty decent report all around," said RBC Capital Market economist Su-Lin Ong. "After two particularly soft months it's pretty encouraging.
"We expect the jobless rate to hold," she said. "The message on the labour market is that it's softer than 2010 and the pace of employment growth has moderated this year ... It's probably going sideways but it's not deteriorating.
"It argues against a rate cut in November," she said.
Despite the strong jobs figures, financial markets are still seeing a chance of a rate cut in November. Interest rate futures indicate a two-in-three chance of an easing next month, down sharply from 111 per cent before the jobs data was released (How interest rate futures work).
Queensland leads jobs recovery
The jobless rate ticked up to 5.5 per cent in New South Wales in September from 5.4 per cent in August. Similarly in Victoria, it rose 0.1 of a percentage point to 5.3 per cent in the same period.
In Queensland, the unemployment rate tumbled to 5.4 per cent in September from 6.3 per cent, as the state continues to recover from the flooding disasters earlier in the year. In the other mining state of Western Australia, the jobless rate slipped to 4.3 per cent from 4.4 per cent.
The jobless rate in South Australia jumped to 5.6 per cent in September from 5 per cent in August, while in Tasmania it dropped to 4.7 per cent from 5.2 per cent.
ANZ economist Julie Toth said that based on the performance of the states, evidence of Australia's two-speed economy was on display again.
"There has been a very strong rebound in Queensland and WA," she said.
Signs of two-speed economy
Australia's employment market, strong by global standards, had encountered some headwinds lately, as a patchy local economy and rising global uncertainty led to a slowdown in jobs growth.
In the six months to August, about 21,500 net jobs were created, a sharp fall from the 118,800 jobs generated in the previous six months ending in February, as companies grew more cautious about adding workers.
And in a sign of subdued hiring intentions, the latest ANZ job ads survey slumped 2.1 per cent in September following a revised 0.7 per cent decline in August, marking the fifth drop in six months. However, not all signs for the economy are negative with consumer and business confidence improving on hopes of rate relief from the Reserve Bank. Also, retail sales posted their second increase in two months in August, giving hope that the domestic economy was stronger than expected.
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