Australia's jobless rate unexpectedly dived to its lowest since 2012 last month, but the decline smacked more of statistical noise than a true signal of incipient inflationary pressures and rising interest rates. Figures from the Australian Bureau of Statistics (ABS) out on Thursday showed the unemployment rate dropped to 5.0 percent in September, when analysts had forecast a steady 5.3 percent.
It was the lowest reading since April 2012 and took unemployment to a level that might be considered a harbinger of accelerating wages and inflation by the Reserve Bank of Australia (RBA), at least theoretically.
The detail, however, was not nearly as strong. Net employment grew just 5,600 in the month, below the 15,000 expected and compared to a 44,600 jump in August. Instead, the entire fall in unemployment was due to a sharp drop in the number of people actively looking for work. New entrants into the ABS survey had a jobless rate 1.2 percentage points lower than those leaving, biasing down the result.
The ABS's measure of underemployment, which includes those who want to work more hours, also held steady at 8.3 percent. "Our message on whether that will trigger much faster wage growth is "don't hold your breath"," said Paul Dales, head of Australian economics at Capital Economics. "Underemployment is still unusually high and the structural forces that have restrained wage growth in all major economies aren't going to disappear."
The RBA has held rates at 1.5 percent since mid-2016 and has shown no inclination to move anytime soon. Thursday's report showed annual jobs growth slowed a touch in September to 2.3 percent, though that still outstripped the US pace of job creation. RBA Deputy Governor Guy Debelle devoted an entire speech this week to the labour market, arguing it was "in pretty good shape."