Rise in unemployment won't trouble RBA

11 Oct 2012, 3:58 pm   -   Source: AAP
A rise in the unemployment rate will not trouble the Reserve Bank of Australia, economists say. (AAP)

A rise in the unemployment rate will not trouble the Reserve Bank of Australia, economists say. (AAP)

September jobs data delivered a mixed picture for the labour market, but is unlikely to prompt further rate cuts by the Reserve Bank, economists say.

A 29-month high in unemployment means homebuyers are still on track to benefit from lower interest rates before Christmas.

The unemployment rate rose to 5.4 per cent in September, from 5.1 per cent in August, figures released by the Australian Bureau of Statistics on Thursday showed.

That was despite 14,500 jobs being added to the economy, well above the 5,000 economists had expected.

CommSec chief economist Craig James said the data gave a mixed reading, but indicated that the labour market was not as weak as some had expected.

"It's a very mixed picture - there are some sectors which are still crying out for staff, in hospitality, resources and healthcare. But there are other sectors where they're looking to shed jobs," he said.

JP Morgan economist Tom Kennedy said the rise in unemployment was due to a rise in the participation rate - the percentage of people either in work or looking for work - to 65.2 per cent, from 65.0 per cent.

"Perhaps it is positive in the sense that the economy actually added jobs, rather than lost jobs, and that increase (in the unemployment rate) is due to that increase in the number of people looking for work," he said.

Mr Kennedy said the figures would not trouble the Reserve Bank of Australia (RBA), which has been expecting a rise in the unemployment rate for several months.

He said markets and most economists still expected the RBA to cut the cash rate again, possibly as early as November, and Thursday's data would not change the outlook.

The RBA cut the cash rate by a 25 basis points to 3.25 per cent in October.

CMC chief market strategist Michael McCarthy said the September job figures were still a positive sign that job creation was happening.

"Overall, this is a minor positive for Australia, and that means that interest rates are less likely to fall, and that's supporting the Aussie dollar."

In Queensland, unemployment was at its highest point since 2009, rising to 6.3 per cent in September, from 6.0 per cent in August.

Tasmania also reported a high rate of 7.3 per cent unemployment, up from 6.8 per cent in August.

Government policies such as carbon pricing were actually creating - rather than diminishing jobs, said Employment Minister Bill Shorten.

"Since the carbon pricing mechanism was introduced ... there have been 200 jobs created every day," he told parliament on Thursday.

Mr Shorten added that there were now more Australians in full-time work than ever before at 8.1 million.

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