"Employment growth is just not enough to cover the number of new entrants into the workforce"
-Michael Workman Commonwealth Bank senior economist
The Australian Dollar lost 0.4% against the greenback on Thursday as situation in the labour market is continuing to deteriorate and a recent drop in unemployment rate masks a growing trend of underutilization in the Australian economy. The Australian Bureau of Statistics said the overall jobless rate dropped 0.2% to 5.6% last month, beating analysts' expectations of 5.8%. However, the decline was led not by the higher number of employed people, but due to a fall in the participation rate. The proportion of workforce that is currently employed, looking for job or ready to start work tumbled 0.1% to a seven-year low of 64.9% over the same period.
Figures also showed the number of full-time jobs inched higher by 5,000 in September, while part-time employment advanced by 4,100. Even though jobless rate has been hovering around 5% since 2010, the participation rate has been moving in a strong downside trend since it reached 66% in November 2010, the highest level since records began. A similar situation can be observed in U.S. labour market, where unemployment rate is falling closer 7%, level which is considered by Bernanke as a benchmark to start tapering its QE, while payroll-to-population rate is declining as well. However, unemployment rate is a lagging indicator of economic health and it is likely to be last indicators to turn around.
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