The unemployment rate fell to 5.2% in September, despite predictions it would remain steady at 5.3%, casting doubt over the possibility of an interest rate cut next month.
According to the Australian Bureau of Statistics, 24,000 jobs were created last month, with full-time jobs accounting for 10,800 of the new jobs.
The Australian dollar surged on the release of the report, reaching a high of $US1.0230, from $US1.0150 before the report.
In recent trade, the currency has been changing hands at $US1.0204.
Recent weakness in the job market has prompted speculation the Reserve Bank will cut interest rates, but the RBA may rethink this move if employment remains strong.
“Some may be tempted to say that today’s 20,400 rising in total employment is a strong number and indicative of a robust labour market. We would argue the contrary,” Smirk says.
“The Australian economy has shed close to 5,000 jobs over the last six months so it is clear the labour market has gone through quite a soft patch.”
“We are forecasting the unemployment rate to peak at 5.75% by mid 2012. While WA is set to improve, and Queensland should lift… the drag from the southeast will be enough to see a rise in overall unemployment.”
Smirk says the labour market in NSW and Victoria has reached a turning point, which will have serious implications on the rate of unemployment.
“NSW has lost 17,300 jobs over the last six months while Victoria has been broadly flat… Manufacturing, construction and financial services are currently shedding jobs,” he says.
“There needs to be a startling strong outperformance from WA and Queensland to drive an overall improvement in the labour market.”
According to Smirk, the latest figures show there is a structural shift underway, with growing industries tending to employ a higher proportion of female workers.
“Meanwhile, the industries that are shedding jobs appear to be those that tend to employ a higher proportion of males,” he says.
“So far this year, female employment has growth by 69,300 while male employment has fallen 28,200.”
“This has many significant implications for the Australian economy, but one standout is the possibility that many that are currently losing their jobs may have an experience and skill set incompatible with the needs of the industries recruiting.”
“As such, there is a clear risk that those men losing their jobs may face an extended period of unemployment.”