The Reserve Bank may not be able to sit on its hands until 2021 as some analysts expect, with October’s surprisingly firm unemployment data suggesting a move in the cash rate could come a bit sooner than that.
The unemployment rate stayed steady last month at a six-year seasonally adjusted low of 5 per cent, slightly ahead of market expectations, with 32,800 more people in a job since September.
Figures from the Australian Bureau of Statistics showed the seasonally adjusted participation rate increased by 0.1 per cent to 65.6 per cent, also ahead of expectations.
The monthly hours worked in all jobs increased by 6.1 million hours, or 0.3 per cent, in October.
The last time the seasonally adjusted unemployment rate was this low was April 2012. The last time it was lower was June 2011, when it was 4.9 per cent.
CommSec chief economist Craig James said the figures were good news for consumer-focused businesses. The data, along with consumer confidence above its longer-term averages, would support household spending.
“The Reserve Bank will be happy to leave rate settings unchanged,” Mr James said.
But the extent of the tightening of the job market makes it hard to believe that the RBA will stay on the interest rate sidelines until 2021 as some analysts currently expect.”
The Australian dollar spiked on the release of the data, climbing from 72.33 US cents to 72.79 US cents just before midday on Thursday (AEDT).
Since October 2017, full-time employment in Australia has increased by 238,800 people. Part-time employment has increased by 69,400 people.
The largest total increase in employment for October was in NSW, up 16,300 jobs, with the participation rate jumping 0.32 per cent to 65.2 per cent.
However, the state’s total unemployment rate edged 0.1 per cent higher to 4.4 per cent.
South Australia, meanwhile, had 7700 more people in jobs and the highest lift in the participation rate, up 0.5 per cent to 62.5 per cent.
Victoria had a 3500 decrease in jobs and a 0.2 per cent drop in the participation rate, while Queensland jobs dropped by 3200.
Tasmania enjoyed the sharpest fall in the unemployment rate, down 0.4 per cent to 5.3 per cent.
Youth unemployment nationally stands at a seasonally adjusted 11.3 per cent, a slight improvement from September.
The unemployment rate among men aged 18 to 25 is 12.5 per cent, and 9.8 per cent among women of the same age bracket.
There was a 0.7 per cent decrease in the rate of young people looking for full-time work in October, down to 12.3 per cent, and a 0.2 per cent increase in young people solely looking for part-time work, up to 10.2 per cent.