The jobless rate has dropped back to 3.4 per cent, defying expectations of an increase and fuelling the case for another interest rate rise before Christmas.
Official data from the Australian Bureau of Statistics showed 32,200 jobs were added to the Australian economy, with the participation rate remaining at 66.5 per cent.
Economists broadly expected to see fewer jobs added to the economy – about 15,000 – and the jobless rate edging up to more like 3.6 per cent.
The October employment figures revealed a labour market still close to capacity, with essentially one job vacancy for every person looking for work.
“With employment increasing by around 32,000 people and the number of unemployed decreasing by 21,000 people, the unemployment rate fell by 0.1 percentage point to 3.4 per cent,” the ABS’s Bjorn Jarvis said.
Of those 32,000 people, men were employed at a rate of three to one compared with women.
KPMG chief economist Brendan Rynne said this supported the need for measures to boost female participation in the workforce.
For men, the unemployment rate fell to the lowest rate since 1974, dropping to 3.2 per cent. For women, it held steady at 3.6 per cent.
The proportion of people working full-time rather than part-time also continues to grow, with 70 per cent of the workforce now employed full-time.
Dr Rynne said this partly explained the boost in hours worked for the month, which rose by 2.3 per cent.
“Clearly the challenge with hiring new staff qualified for the vacant roles has caused employers to look internally to existing staff to step up and provide additional working capacity within businesses and organisations,” he said.
BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the labour market was still too tight, which was starting to show up in wages growth.
The September quarter wage price index, which is typically slow to respond to the tight labour market and does not necessarily capture bonuses and other pay perks designed to attract and retain staff in a tight jobs market, lifted by 3.1 per cent annually in September.
“The question, now, is the third quarter a bumper quarter because of the Fair Work Commission’s minimum wage decision, or are we working into a phase where wages are growing faster,” Mr Langcake said.
He said the Reserve Bank was trying to hike rates fast enough to get ahead of wages growth becoming a major contributor to inflation.
“While the labour market appears to be tracking sideways, the RBA will likely want to see more of a tapering in demand to avoid a sharp breakout in wage growth,” Mr Langcake said.
Employment Minister Tony Burke said workers should actually be seeing more wages growth given the sustained low unemployment.
“While real wages aren’t going to be in front of the extraordinary inflation figures we see at the moment, they should be at a figure higher than 3.1 per cent,” he told reporters in Sydney.
Mr Burke said the latest wages and labour-force data supported the need for expanded multi-employer bargaining, which is part of the workplace bill the Albanese government is trying to pass before Christmas.
HSBC chief economist Paul Bloxham said the latest figures supported another 25 basis point rate rise in December.
“These figures, along with yesterday’s wages numbers for Q3, which surprised a little to the upside too, should be enough to convince the RBA that its optimal path is to continue to lift its cash rate a bit further,” Mr Bloxham said.
© AAP 2022
