The Australian economy created 64,900 new jobs in October, more than double the market expectations, as the labour market continued to recover from the impact of the Covid-19 pandemic. However, the unemployment rate also rose slightly to 3.7%, as more people joined the workforce in search of work.
The latest figures from the Australian Bureau of Statistics (ABS) showed that the economy added 64,900 jobs in October, seasonally adjusted, compared with the revised figure of 27,700 jobs in September. The increase was driven by both full-time (38,500) and part-time (26,400) employment, and was spread across most sectors and states.
The largest gains were in the health care and social assistance sector (18,900), followed by the professional, scientific and technical services sector (14,800) and the construction sector (11,600). The only sector that recorded a decline in employment was the accommodation and food services sector (-5,700), which was affected by the lockdowns and restrictions in some states.
The strongest job growth was in New South Wales (28,100), which emerged from a prolonged lockdown in mid-October, followed by Victoria (16,900) and Queensland (11,400). The only state that recorded a fall in employment was Western Australia (-2,300), which faced some border closures and outbreaks in October.
Unemployment rate edges up as participation rate reaches record high
Despite the strong job growth, the unemployment rate also increased slightly to 3.7% in October, up from 3.6% in September. This was because the participation rate, which measures the proportion of people aged 15 and over who are either employed or actively looking for work, rose to a record high of 67.1%, up from 66.9% in September.
This means that more people entered the labour market in October, either returning from temporary absence or starting to look for work for the first time. The ABS estimated that there were 542,900 people who were unemployed in October, up by 13,800 from September.
The underemployment rate, which measures the proportion of employed people who would like to work more hours, also increased slightly to 7.4%, up from 7.3% in September. This indicates that there is still some spare capacity in the labour market, as some workers are not fully utilising their skills and preferences.
Implications for the economy and monetary policy
The October labour force data showed that the Australian economy is resilient and adaptable, as it bounced back from the Covid-19 shocks and adjusted to the changing conditions. The strong job growth suggests that the economic recovery is gaining momentum, as businesses reopen and consumer confidence improves.
However, the rise in the unemployment and underemployment rates also signals that there are still some challenges and uncertainties ahead, as the labour market adjusts to the new normal. The emergence of new variants, the uneven vaccination rates, and the potential inflation pressures are some of the factors that could affect the labour market outlook.
The Reserve Bank of Australia (RBA), which has kept the cash rate at a record low of 0.1% since November 2020, has said that it will not increase the interest rate until actual inflation is sustainably within the 2-3% target range, which it expects to happen in 2024 at the earliest. The RBA has also said that it will monitor the labour market closely, as it is a key indicator of the inflation outlook.
The October labour force data is unlikely to change the RBA’s stance, as it showed a mixed picture of the labour market, with both positive and negative signs. The RBA will likely wait for more evidence of a sustained improvement in the labour market and inflation before considering any changes to its monetary policy settings.