11/06/2015 - 10:22

WA jobless rate falls to 5.1%

11/06/2015 - 10:22

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The unemployment rate across Australia, and especially in Western Australia, has recorded a surprising fall, with the local number affected by a special adjustment by the Australian Bureau of Statistics.

WA jobless rate falls to 5.1%

The unemployment rate across Australia, and especially in Western Australia, has recorded a surprising fall, with the local number affected by a special adjustment by the Australian Bureau of Statistics.

The national jobless rate has fallen to 6 per cent in May, its lowest level in a year, with unemployment in WA dropping by 0.5 percentage points to 5.1 per cent.

The jobless rate dropped in May from a downwardly revised 6.1 per cent in April, according to official figures out today.

The result is the lowest jobless rate since May 2014.

According to the ABS, however, WA's figure of 5.1 per cent included an ‘ad-hoc’ adjustment for the state’s figures based on a change in response patterns to the monthly survey used to determine the unemployment rate.

But if the figures are accurate, then it means about 6,000 jobs were created in WA in May, according to a CommSec analysis.

“The unemployment rate looks like it has topped out. At two decimal places it is holding at 5.96 per cent – the best reading in a year,” CommSec economist Savanth Sebastian said.

“(It is) a result that should help to ease some concerns about job security. An improvement in confidence would certainly bode well for retail activity and broader economic growth.”

Morgan Stanley research was skeptical of the reported jobs growth and drop in unemployment in May.

“This month the ABS has revised down seasonally adjusted WA unemployment on the basis of a change in survey response patterns,” a Morgan Stanley report said.

“With growth too reliant on the housing cycle and job-losses still to come out of the resources sector, we retain our view that peak unemployment will be closer to 7 per cent whilst acknowledging that this may come later than the Q4, 2015 we expected.”

The total number of people with jobs rose by 42,000 to 11.76 million in May, markedly better than economists' expectations of a rise of 10,000.

St George senior economist Janu Chan described the numbers as very strong.

"I'm calling it a bit of a conundrum given the economy isn't tracking so well," Ms Chan said.

"We've got below trend growth but we seem to be adding quite healthy job gains."

She pointed to weak wages growth across the country as a possible reason for the upbeat numbers.

"That just gives greater scope for job hiring, and it could mean there's a little bit more flexibility in the labour market than in much earlier years," Ms Chan said. 

The data showed the participation rate, which refers to the number of people that have a job, are looking for work or are ready to start work, was steady at 64.7 per cent.

Full-time employment was up 14,700 while part-time employment jumped by 27,300.

JP Morgan economist Ben Jarman said he didn't believe the unemployment rate would reach the peak of 6.5 per cent that some forecasters had predicted.

"The business surveys have been showing that domestic demand conditions have been a little bit better and that's consistent with unemployment moving more sideways rather than up," he said.

"We are still seeing falls in mining investment, which are probably steeper than expected, so it's too early to say that it has peaked."

Mr Jarman said the stronger-than-expected jobs figures would encourage the Reserve Bank to hold off on cutting the cash rate again for a while.

"Thing aren't deteriorating quite as quickly that would warrant further easing, especially as they've cut by 50 basis points this year," he said.

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