- Paul Dales, Capital Economics Australia and New Zealand chief economist
Australian job growth dropped in September, but a decline in the participation rate helped to keep the unemployment rate steady. The nation's jobless rate was 6.2% last month, in line with economists' expectations. At the same time, the Australian economy lost 5,100 jobs, whereas the market had predicted around 5,000 jobs to have been created in September. The participation rate slid slightly from 65% to 64.9%, keeping the unemployment rate in check.
The Reserve Bank of Australia policy makers have been pleasantly surprised by the improvement in the labour market over the last year given Australia's transition out of the mining investment boom. The RBA had forecast the jobless rate to peak at around 6.5% by now, but higher-than-expected rate of job growth has prompted the central bank to upgrade its outlook for the labour market. The RBA predicts the unemployment rate to stay around the current levels over the next year, before sliding as economic growth gathers momentum. However, a number of economists disagree with the central bank's outlook, and argue that further support would be needed. The RBA last slashed rates twice this year, in May and February, and kept the neutral stance since then.
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