The unemployment rate fell 0.2% to 5% in December, according to the latest figures from the Australian Bureau of Statistics.
The data reveals the unemployment number fell by 25,400 people to 598,700. The participation rate decreased by 0.2 points to 65.8%, with the aggregate monthly hours worked falling by 3.4 million hours to 1,599 million.
Full-time employment increased by 1,700 to 8.034 million people, while part-time employment increased by 600 people to 3.38 million.
The data marks Australia’s lowest unemployment rate in two years. According to the ABS, the fall in unemployment was assisted by the 0.2% fall in the workforce participation rate.
Economists had predicted an unemployment rate of 5.1%, with CommSec economist Craig James saying the December figures should be taken with “a grain of salt”.
“It’s clear that the pace of jobs growth in the early part of 2011 is likely to be more sedate. The economy has softened in the last couple of months,” James says.
“Manufacturing, construction and the services sector are all contracting, while businesses are trimming new orders and profitability is being affected.”
“No doubt the softer economy is ensuring that businesses remain cautious, and more importantly the November rate hike is yet to have a full impact on the domestic economy.”
Meanwhile, business groups are warning the Queensland and national employment markets will be severely impacted by the Queensland floods.
Matthew Tukaki, chief executive of business advisory firm The Sustain Group, expects unemployment to rise significantly in the next two quarters.
“People are simply not able to get to work, or the workplace just no longer exists. I estimate that thousands of small- and medium-sized business operators have already been impacted and thousands more, who are part of the supply chains of major corporations, will be next,” Tukaki says.
“Even when the floods abate and rebuilding begins, another reality will hit our economy and that is skills,” Tukaki says.
“We simply do not have enough of a vocational and technical trade base to rebuild on such a large scale… If that planning does not get underway soon – of where the labour supply will come from – the rebuilding process may take longer.”