Jobless rate drops to 5.1%
Chris Zappone
September 9, 2010 - 12:16PM

   

Update The jobless rate fell more than expected in August as employers took on new staff, helping to power the economy's expansion and reviving expectations interest rates might increase before the year is out.

The unemployment rate declined to 5.1 per cent last month, from 5.3 per cent in July, according to the Australian Bureau of Statistics. Analysts had tipped a fall to 5.2 per cent.

What the economists say: experts' view
The jobless front, state by state
Online job ads retreat

The data show that 53,100 full-time jobs were created in August - the biggest monthly increase in more than two years - or just prior to the global financial crisis hitting Australia.

The number of part-time jobs dropped by 22,100, leaving a net gain of 30,900. So far this year, the economy had added about 228,200 jobs, raising concerns that skills shortages may ago start to hold back growth.

Australia's jobless rate remains among the lowest in the rich world, and is roughly half the rate in US and much of Europe.

The dollar jumped more than half a US cent on the jobs news as investors recalculated their bets on the outlook for further interest rate rises. It jumped as high as 92.38 US cents, its strongest level against the greenback in four months.

Markets now rate the probability of an October rate rise by the Reserve Bank as a one-in-four chance, up from a 10 per cent chance prior to today's jobs figures. In one year's time, the RBA's cash rate will be at 4.75 per cent, in effect indicating one more rate increase by then.

Gathering steam

The latest jobs figures come the same week the Reserve Bank kept interest rates steady for the fourth consecutive month. In recent days, national accounts figures also showed the economy expanding at its fastest pace in three years.

However, ICAP economist Adam Carr said the strong reading meant the Reserve Bank was likely to raise interest rates before the end of the year: "I don't think it will be hiking before November." He said the central bank would most likely want to see more retail trade and inflation data before moving.

"It's clear the election didn't drive the (unemployment) numbers. This is permanent job growth and it shows the Australian economy is on a strong footing"

Commonwealth Bank senior economist John Peters said "the economy is picking up speed. We are going to hit capacity constraints. We think the RBA will be taking insurance to make sure inflation pressures remain in check".

Commonwealth Bank expects another interest rate rise by the end of the year, taking the official cash rate to 4.75 per cent - and further out, by the end of 2011, the bank expects rates will hit 5.75 per cent.

"We are in sharp contrast to the rest of the developed world," Mr Peters said, adding that Australia's challenge was now to manage prosperity compared with other parts of the world where debt and economic crises continued.

New South Wales leads

The biggest shift in the jobless rates among the states came in New South Wales, suggesting the drop was not entirely tied to the booming mining sectors.

The unemployment rate for the most populous state fell to 5 per cent in August from 5.5 per cent, while in Victoria it held steady at 5.5 per cent.

In Queensland, joblessness declined to 5.4 per cent in August from 5.6 per cent, while in South Australia it jumped to 5.4 per cent from 5.1 per cent in the previous month.

In Western Australia, the unemployment rate crept higher to 4.5 per cent in August from 4.4 per cent, while in Tasmania it to tumbled to 6 per cent from 6.6 per cent in July.

Nationwide, gross domestic product increased 1.2 per cent in the second quarter from 0.7 per cent in the first quarter, data revealed last week showed.

More recent signs of a pick up in demand include home loans data, which rose 1.7 per cent in July, the second positive month in the past three. Australia’s trade balance remained in surplus to the tune of $1.88 billion in July, while building approvals turned positive for the first time in three months.

So far, the strength of Australia’s jobs market has failed to trigger an outbreak of wage inflation, despite cashed-up companies and a shortage of workers. Second-quarter inflation slipped to 0.6 per cent in the June quarter from 0.9 per cent in March.

how many jobs for the local and how many for the new arrival ..??

And how about youth unemployment, and under-employment.

If someone works 8 hours a week, would you call this employed?


Labor does!

But sshhh, lets keep the positive vibe going here folks. ...so as to not alarm our already nervous investors.

Because if they think we are an under-employed broke nation trying to recover from a reckless Labor governments squandering and mass-immigration  ...a government we re-elected to be our minority flower-pot government, heaven forbid, they might think we are a pack of freeze dried vegetables or something.

1 thing I do agree with is interest rates will go up (& here's a free economic lesson) because inflation will need to be kept in check as our economy CONTINUES TO GROW. by dsmithy

Inflation can be kept down if and when the stupid Labor Party reduces it's wasteful stimulus spending.

bridonta wrote on Sep 9^th, 2010 at 12:48pm:

Oh ok no argument on economics so lets dumb it down to "Stop the Boats"

Dsmithy70 wrote on Sep 9^th, 2010 at 12:52pm:


How about in the United States I pay half for energy and petrol you do and the Greens want you to be paying even more?

Sound good?