Western Australia's demand for workers has remained strong, recording just 4 per cent unemployment for despite an unexpected fall in national employment figures in October.
Western Australia's demand for workers has remained strong, recording just 4 per cent unemployment despite an unexpected fall in national employment figures in October.
The latest results confirm WA's economic boom has unlocked it from the rest of the country and reinforced economists' belief that the national labour market is moderating leading to a likely interest rate fall.
The trend estimate of employed persons in Western Australia has gained pace recently, according to Australian Bureau of Statistics which show the number of employed people in the state rose to 1,055,900 in October 2005.
The figure has generally risen from 832,200 in October 1995 to 987,100 in August 2004. Recently, the trend has increased at a greater rate.
Nationally, ABS figures show total employment fell 19,800 to 10.005 million in October, seasonally adjusted, while the jobless rate edged up to 5.2 per cent.
The market had been expecting a rise of 12,500 in total employment and for the unemployment rate to have remained steady at 5.1 per cent.
ICAP head of economics and strategy Michael Thomas said this could be an important turning point for the jobs market.
"We saw a very big fall last month (September) - we didn't know if that was just a one-off or a fluke, but the back-up with another fall this month suggests that employment has finally fallen in line with what the job vacancies numbers have been telling us for six months," he said.
"It's reinforcing the notion that the Australian economy is stuck in a rut and it's not clear what's going to lift it out of this rut.
"And in that situation, where we are running well below potential, that suggests that the unemployment rate will continue to edge higher and the RBA (Reserve Bank of Australia) will start to edge towards a rate cut, unless there's a nasty inflation surprise around the corner."
The participation rate in October was 64.4 per cent, compared with a unrevised 64.5 per cent in September.
RBC Capital Markets senior economist Michael Every said the fall in employment in September had looked to be somewhat unrepresentative of the true labour market situation.
However, the October data suggested that the deceleration in employment growth may be faster than many expected.
"We are not expecting sustained month-on-month job declines on this scale in the short-term, but we certainly think that the high water mark for the labour market has been passed, and this should help cap wage pressures ahead," he said.
"From a rates perspective the RBA are very clearly on hold ahead - and we feel even more confident of our view that the next rate move is down."
National Australia Bank senior economist Spiros Papadopoulos said that while the October result was a bit weaker than expectations, the RBA would be quite happy with the outcome.
"They said on Monday that in order to achieve that levelling out of underlying inflation at 3 per cent next year, we'd need to see some mild easing in the labour market," he said.
"And looking at the past couple of months, there appears to have been some softening coming through on the back of the weaker domestic demand environment that we've had."
He said the central bank was likely to leave rates on hold at 5.50 per cent for now.
In Monday's quarterly statement on monetary policy, the RBA said that given the shift in the growth of demand to a more sustainable pace and the prospect of a mild easing in labour market conditions, the rise in inflation it was looking for was expected to be relatively modest, with underlying inflation levelling out at around 3 per cent in the second half of 2006.
HSBC chief economist John Edwards said the weakness in the jobs numbers may be a delayed reaction to a softening in gross domestic product (GDP) growth.
"It may well be, as the Australian Bureau of Statistics argues, that what we are seeing is merely a delayed response to last year's slowdown in GDP growth," he said.
"That would mean employment will pick up again through 2006, because GDP growth has turned up."
But the downturn in employment also coincided with weaker numbers for retail sales, exports, building approvals and mortgage credit growth, he said.
"Interest rates are low, taxes have been cut, and global growth is quite firm - all suggesting that underlying Australian output growth continues in the range of 3 per cent to 3.5 per cent," he said.
"Today's jobs numbers do confirm, however, that no increase in the cash rate is likely for quite a while."
State Government response to the news is listed below:
Western Australia is on the brink of smashing through the four per cent unemployment barrier after the latest Australian Bureau of Statistics employment figures released today.
Employment Protection Minister John Kobelke said the ABS figures for October showed four per cent unemployment in WA against a national average, which rose slightly to 5.1 per cent.
"This again confirms WA as the employment capital of the nation," Mr Kobelke said.
"This means there have now been 15 months when our unemployment rate has been at or below five per cent, continuing a period of record low unemployment.
"The October unemployment figure is the lowest on record for this State since the Labour Force Report began compiling data almost 30 years ago.
"Since the Gallop Government has been in office, we have been able to employ 125,800 more Western Australians.
"This shows we continue to have strong economic growth and that sound financial management is ensuring continued opportunities for all Western Australians."
Mr Kobelke said the strong employment figures were despite a fall in the State's participation rate from 68.1 per cent in September to 67.6 per cent in October. WA's participation rate was still the best of any State.
This monthly fall was offset by a continued upward trend in total employment with 48,500 more Western Australians in work since the beginning of the year. This was a
4.6 per cent rise - the strongest rate of employment growth of any State and double the national rate of 2.3 per cent.