Australia’s jobs market is still healthy, official data shows, but economists warn it could worsen if Europe’s debt crisis deteriorates.
The unemployment rate fell marginally to 5.2 per cent in October from an upwardly revised 5.3 per cent in September, the Australian Bureau of Statistics (ABS) reported on Thursday.
HSBC chief economist Paul Bloxham said the jobs data confirmed that Australia’s economy was in reasonably good shape.
“An unemployment rate of 5.2 per cent is a pretty low level, relative to history in Australia,” Mr Bloxham said.
Total employment rose by 10,100 jobs to 11.462 million, according to the ABS.
The forecast was for total employment to have risen by 10,000 in October with the unemployment rate rising to 5.3 per cent, according to the median of 15 economists surveyed by AAP.
Mr Bloxham said uncertainties in Europe could disrupt the Australian economy and affect the labour market in the coming months.
“The big story at the moment is what’s going on in terms of the global scene.
“Europe looks very messy at the moment and provides a clear downside risk for the global economy and for Australia as well.
“But so far, so good, in terms of Australia’s domestic performance.”
Mr Bloxham, who is a former Reserve Bank of Australia (RBA) economist, said the central bank was unlikely to cut rates on local factors alone and was keeping a close eye on Europe’s debt crisis.
The RBA decided to cut the cash rate by 25 basis points to 4.5 per cent last week and cited the slowing economy for its decision.
CommSec chief economist Craig James said the jobs data showed a stark contrast to the employment outlook in other countries.
“It highlights the fact that our economy is in pretty good shape,” he said.
Mr James said unless Europe’s sovereign debt crisis “implodes”, the RBA probably won’t change interest rates at its December board meeting.
“We are expecting another interest rate cut, but the timing is more likely to be in February unless there’s a significant deterioration in the European situation.”
ICAP senior economist Adam Carr said the local fixed income market softened after the jobs data was released.
“The market is fully pricing in a cut (in the cash rate) with events in Europe overwhelming domestic data,” Mr Carr said.
“But today’s jobs data (suggests) that the only real threat on the local economy is Europe.”
He said the RBA was premature in cutting the cash rate by 25 basis points to 4.5 per cent on Tuesday last week.
“The next rate cut will depend on Europe.
The ABS reported that full-time employment rose by 20,000 to 8.068 million in October and part-time employment was down 9,900 to 3.395 million.
The October participation rate was 65.6 per cent steady compared with the unrevised 65.6 per cent in September.
