×

INSTANT VIEW 3-Australia jobless rate climbs to 5.4 pct, employment up

SYDNEY, Oct 11 (Reuters) - Australia's jobless rate rose to 5.4 percent in September as more people joined the workforce, but employment also increased by more than expected, sending the local dollar higher.

Thursday's data from the government showed jobs rose by a seasonally adjusted 14,500 in September.

*************************************************************

KEY POINTS:

- Sept employment +14,500 mth/mth, seasonally adjusted

(Reuters poll: +3,750)

- Sept full-time employment +32,100, part-time -17,700

- Sept unemployment rate 5.4 percent, s/adj (poll 5.3)

- Sept participation rate 65.2 percent, s/adj (poll 65.0)

- August's unemployment rate unrevised at 5.1 pct

- For a brief data table click on

COMMENTARY

TOM KENNEDY, ECONOMIST, JPMORGAN

"This result is more in line with what the RBA thinks. Unemployment rate has been very low so far this year...our forecasts, as with the RBA, ...by the end of the year the unemployment rate being at 5.5 percent. It's getting there.

"It's getting to the stage where we all thought it would be and we will see more of that as the participation normalises more over the coming months.

"Our forecasts are for the RBA board to cut rate again in December and again in February...nothing really fundamentally changes. The RBA will maintain their easing bias. Today's results just really support that."

SU-LIN ONG, SENIOR ECONOMIST, RBC CAPITAL MARKETS

"It's the unemployment rate that best captures the underlying health of the labour market, it's broken out of this 5 to 5.3 percent range, which it's been in for some time. At 5.4 percent it's the highest since the early part of 2010.

"Part of it is the higher participation, but what's really driving it is the rise in unemployed persons in the month, and that's consistent with a reasonably soft labour market, and the leads are pointing to further softness consistent with the waning in growth momentum. So we'd expect the labour market to ease off further and the unemployment rate to move higher.

"The unemployment rate is consistent with increasing slack in the labour market and further (rate) cuts. Whether it's next month or December is debatable, we are leaning to November."

MICHAEL BLYTHE, CHIEF ECONOMIST, COMMONWEALTH BANK OF AUSTRALIA

"It doesn't make the story any clearer, with a decent rise in employment, but unemployment up as well. The overall impression when we smooth all these trends out is it's still a pretty soft labour market overall.

It's still a case of easing bias here. The Reserve Bank still expects unemployment to rise. They obviously interpret the labour market now as soft as they've said. Given some of the global concerns that are still playing out the risks still point to lower rates. We think we'll see another move (down) in November."

PAUL BRENNAN, HEAD OF ECONOMIC AND MARKET ANALYSIS, CITIGROUP

"It's broadly consistent with what we were thinking that last month's figures understated the unemployment rate. It's good there has been an increase in employment, but the reality is that it's not enough to keep unemployment steady.

It's all pretty consistent with the fact the economy has slowed a bit, below potential growth, and that's affecting in a higher unemployment rate. The expectation is it will rise a bit further yet before the interest rate cuts kick in."

PETER ESHO, ANALYST, CITY INDEX

"The headline unemployment rate is worse than expected but not because jobs growth has been poor. The RBA can probably buy a little more time to see the impact of its recent cuts and a recovery in commodity prices, like iron ore, before it is forced to move again. We maintain our view that February is more likely than November to see another 25 basis point cut."

MARKET REACTION: The Australian dollar rose more than a third of a cent to $1.0258 on the data. Interbank futures

still

imply rates at 3 percent by Christmas with a better than evens chance of a cut next month.

LINKS:

The Australian Bureau of Statistics Web site is:

BACKGROUND:

- The median forecast had been for slight a rise of 3,750 in September employment. Estimates for this volatile series ranged from a fall of 8,000 to an increase of 20,000.

- The jobless rate was seen rising to 5.3 percent, following August's surprise dip to 5.1 pct, with a range of 5.2 percent to 5.3 percent.

- The jobless rate has been remarkably steady around 5.2 pct for months now even though employment growth has been subdued. That was partly due to an unusually large fall in the participation rate, which has dropped a full percentage point since late 2010 to stand at a five-year low of 65.0 pct.

- RBA policymakers suspect the fall in participation means the labour market is softer than implied by the jobless rate alone, which is a major reason they chose to cut interest rates this month.

- Most leading indicators of employment point to only modest growth ahead and a likely gradual rise in the jobless rate, which would add to the case for further monetary stimulus.

(Reporting by Wayne Cole)

((Wayne.Cole@thomsonreuters.com)(612 9373 1813)(Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

Keywords: AUSTRALIA ECONOMY/