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Australian jobs data beats expectations but not skepticism

Australia added more jobs than expected in November, suggesting continued improvement in the labor market, but analysts remain skeptical on how reliable the data is.

The Australian economy added 42,700 jobs, above the 15,000 forecast by Reuters, data from the Australian Bureau of Statistics (ABS) showed on Thursday. The employment rise was made of 1,800 full-time jobs and 40,900 part-time jobs.

The jobless rate was 6.3 percent, up from 6.2 percent in October.

"Australia's labor market remains loose, but is showing signs of stabilizing," HSBC wrote in a note.

"However, trend employment growth remains subdued - the economy has only added an average of 13k jobs a month over the past six months. That is not enough to keep up with population growth," it said. "The slow pace of the economy's rebalancing has been evident in the labor market, where unemployment has continued to rise fairly steadily. If job gains like those reported in November continue, though, the unemployment rate should start to stabilize."

A closer look highlights still weak conditions in the Australian labor market, Goldman Sachs wrote in a note. "In particular, we note that trend jobs growth is poor and skewed to part-time positions, the unemployment rate continues to trend higher, hours worked are weak, and rates of underutilization have rapidly increased to a 17-year high."

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The reliability of the jobs numbers has been in question recently, with the notoriously volatile data being revised repeatedly in recent months.

Carla Gottgens | Bloomberg | Getty Images

"It is difficult to interpret the official labour market data given recent revisions and uncertainty over what impact changes to supplementary surveys may have had. The bureau of statistics said this week that it will take at least three years before some of those effects will be understood with any degree of certainty," HSBC said.

Barclays agrees: "We do not have a strong view on the labor market data given the unprecedented problems the ABS has encountered with seasonally adjusting the data over recent months," it wrote in a note before the data was released.

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An initial estimate from the ABS, for example, showed a record 121,000 increase in jobs in August. But after the latest revisions made last month, employment is now believed to have fallen by 8,900 in August and then another 23,700 in September.

Still, HSBC took an optimistic view: "We believe that conditions are likely to continue improving over 2015, making further interest rate cuts unnecessary."

However, Goldman Sachs disagreed: "Looking ahead, we expect the current mix of below-trend jobs growth, solid growth in the civilian population and more modest declines in participation rates will see the unemployment rate rise to a cyclical peak of 6.5 percent in 2H2015 - keeping downward pressure on broader inflation," it wrote.

"Against the backdrop of rising unemployment, benign inflation, and an overvalued [Australian dollar], we believe the current risks to the outlook will see the Reserve Bank of Australia cut rates in March and August 2015."