Unemployment rate drops - Oct 2013

Paul Bloxham, chief economist at HSBC Australia, said the job numbers for September were a positive surprise to the market.

“The fall in unemployment suggests some stabilisation in economic conditions,” he said.

According to Mr Bloxham, the recent election could have played a role in the jobs growth seen in September.

“As we have been noting for a number of months now, overall hours worked in the economy have been lifting in recent months. This suggests there is work to be done, but firms have been reluctant to hire new employees to do it - preferring instead to boost hours,” said Mr Bloxham.

“We think this lack of willingness to hire partly reflected firms' uncertainty about the political environment,” he added.

Mr Bloxham noted the 0.1 per cent drop was largely a result of a fall in participation, rather than substantial jobs growth.

The ABS data showed that while employment rose by only 9,000 jobs in September, not even making up for the 11,000 fall in August, the participation rate fell to 64.9 per cent - the first time it has dropped below 65 per cent in over six years.

“Lower participation often reflects discouraged workers and is consistent with low levels of job advertisements in recent months,” said Mr Bloxham.

However, Mr Bloxham reiterated the positive nature of the fall in unemployment and said when considered with other indicators, it showed good signs for the overall economy.

“Taken together with the recent sentiment and housing indicators, the unemployment rate is consistent with the idea that the economy may be at the early stages of an upswing,” he said.