Unemployment reached a low 5.8 per cent in November for the first time since May 2014, according to the latest ABS figures.
The drop was fuelled by a hefty rise in new jobs created of 71,400, the largest monthly increase in decades.
This week’s figures came as a shock to many economists, who in a recent Bloomberg Survey reported by the ABC predicted the unemployment rate would climb above 6 per cent.
Some experts are now suggesting the RBA is more likely to leave the cash rate on hold in 2016, or up, as a result of the surprise jobs figures.
Bank of America Merrill Lynch is one such organisation who is predicting the RBA could raise rates if the jobs boost continues, as reported in the Australian Financial Review .
Michael Yardney, CEO of Metropole Property Strategists, agrees.
“It’s definitely complicated the Reserve Bank’s strategy for boosting the economy,” said Yardney.
“A couple of days ago I would have said there would have been one or two rate drops next year to encourage business to invest and to employ people, but it’s quite possible the Reserve Bank is now going to hold interest rates in the first half of 2016, and its now more likely the next move could be up,” he said.
Bruce Hockman, General Manager of ABS’ Macroeconomic Statistics Division said there was also strong growth year on year.
“The trend shows that around 293,000 more people were employed in November 2015 than in November 2014; an increase of 2.5 per cent,” he said.
Roy Morgan Research believes there are more people unemployed or ‘underemployed’, meaning they are looking for more work than they currently have, than the ABS figures suggest.
Gary Morgan from Roy Morgan Research said that while a record number of Australians were in employment, the supply was still lagging behind demand as thousands of new students hit the market and the number of workers unemployed and under-employed also increased.
The number of workers unemployed and under-employed also increased.
“The employment situation for students over the next few months is crucial for the Federal Government,” he said.
ABS seasonally adjusted figures (monthly change)
- Employment increased 71,400 to 11,900,600. Full-time employment increased 41,600 to 8,205,800 and part-time employment increased 29,700 to 3,694,800.
- Unemployment decreased 2,800 to 739,100. The number of unemployed persons looking for full-time work decreased 9,400 to 517,400 and the number of unemployed persons only looking for part-time work increased 6,600 to 221,700.
- Unemployment rate decreased 0.1 pts to 5.8%.
- Participation rate increased 0.3 pts to 65.3%.
- Monthly hours worked in all jobs decreased 12.7 million hours (0.8%) to 1,645.9 million hours