Unemployment falls to 5.7 per cent

Unemployment falls to 5.7 per cent
Australia’s unemployment rate has unexpectedly fallen 0.2 points to 5.7 per cent with the creation of 37,400 jobs.

This was much better than economists had expected with most of them tipping the unemployment rate would come in at 5.9 per cent.

Still, the split between the full time and part time jobs might be a concern with 11,600 fewer full time jobs and 49,000 more part time jobs.

The figures also show that less work is being done with the number of hours worked per month falling by 1.1 million.

This is significant because the Reserve Bank of Australia in the minutes of its last board meeting said “underemployment” needed to be monitored to in determining the outlook for interest rates.

The workforce participation rate, or the proportion of working-age people at work or actively seeking work, was steady at 64.8 per cent in April.

While the number is encouraging, it is still above the 5.6 per cent reached in October and well above the 4.9 per cent reached in mid-2011.

ANZ’s head of Australian economics David Plank said the figures were a good sign.

“We think we are likely to see a series of strong employment reports over coming months as the official data closes the gap that had opened up with the strong labour market signals coming from other data,” Mr Plank said.

“This may act to stem the decline in consumer confidence that has been apparent since the start of the year.”

Su-Lin Ong from RBA Capital suggested the solid number might not hold up.

“The firmer state of the labour market likely reflects the stronger patch of growth in Q4 2016 and early this year amid a firmer global backdrop and increased optimism,” he said.

“For the RBA, today’s data will be welcomed and may give it a little more confidence in its expectation for a return to above-trend growth. We are less confident that growth will be maintained at the pace of late 2016, especially as the housing construction cycle peaks later this year, consumers remain cautious, and non-mining investment stays modest.”

Gareth Aird from the Commonwealth Bank of Australia said full-time and part-time jobs were equally good “provided that workers in part time employment don’t want to work full time.”

“However, growth in part time employment, rather than full time work, becomes a problem (and indeed undesirable) when there is growth in the number of workers who are not working as much as they would like. This is captured in the underemployment rate which is at its highest level on record,” Mr Aird said.

 



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