Unemployment rate falls to 5.6pc in September

The unemployment rate fell to 5.6 per cent in September, despite an unexpected drop in jobs.

The seasonally-adjusted 9,800 reduction in jobs surprised analysts.

Australia’s unemployment rate has dipped to a three-year low of 5.6 per cent in September despite an unexpected fall in jobs, official ABS figures show.

It fell from a revised 5.7 per cent in August. Analysts had expected an unemployment rate of 5.7 per cent in September.

The seasonally-adjusted 9,800 reduction in jobs surprised analysts and forced the Australian dollar sharply lower amid expectations for a lift in jobs of 15,000.

Making matters worse was the detail of the job losses, with full-time jobs tumbling 53,000 and overwhelming a 43,200 rise in part-time positions.

A 0.2 percentage point reduction in the participation rate to 64.5 per cent ensured the jobless rate edged down to 5.6 per cent – from an upwardly revised 5.7 per cent reading in August – despite the soft overall numbers.

The job market has been stronger than expected this year with unemployment falling gradually, but there has been a bias toward part-time job creation.

The Australian dollar skidded on the report, weakening US0.4c to US76.95c at 12.05pm (AEDT).

Capital Economics chief Australian economist Paul Dales said the Reserve Bank would likely look through the data given a number of distortions, but noted the labour market was edging toward the kind of deterioration that could force further rate cuts next year.

“We can’t rely on the headline number for two reasons,” he said.

“On the one hand, it is probably better than it looks due to the drag caused by the end of the temporary contracts of those people employed for August’s Census.

“But there is also reason to believe that it is worse than it looks. The ABS stated that it has altered the headline figure because the incoming rotation sample for Queensland was ‘considerably different to the rest of the Queensland sample’.”

Mr Dales said an active reduction in the influence of the new sample was unusual and while the ABS did not indicate the direction it has tweaked the data, the evidence suggests a fall in employment in Queensland may have been worse than reported.

“Taking the figures at face value, employment has pretty much ground to a halt in recent months and the annual growth rate has slipped from 2.1 per cent in April to 1.4 per cent,” he added.

“Overall, the RBA will probably continue to judge the labour market as ‘mixed’, but in recent month there have been more signs of a weakening than a strengthening.”