SYDNEY: Australia’s jobless rate dropped to a better-than-expected 5.9 percent in October, data showed on Thursday, lowering expectations that the central bank will cut record-low interest rates.
The Australian Bureau of Statistics figures showed that 58,600 jobs—40,000 full-time and 18,600 part-time—were created last month, a surprise given below-trend economic growth.
It is the first time the jobless rate has dropped below 6.0 percent since May, and was stronger than analysts’ expectations of a steady 6.2 percent for the third-straight month.
The unemployment rate has hovered around a decade-high of 6.0 percent over the past year, with business spending outside the mining sector failing to fill the gap left by a fall in resources investment.
The economy has also been hit by slowing growth in China, Australia’s largest trading partner and the world’s largest commodities consumer.
These factors prompted the Reserve Bank of Australia to cut interest rates to a record-low of 2.0 percent in a bid to boost the economy.
Analysts said signs of an improving labor market would reduce the chances of a near-term interest rate cut, which increased after a surprisingly soft third-quarter inflation reading.
“A strong labor market might not necessarily prevent further rate cuts if underlying inflation fell further,” Capital Economics chief Australia and New Zealand economist Paul Dales said in a note.
“But we have to admit that if this strengthening of the labor market is sustained, the chances of rates falling to 1.5 percent next year, as we have been forecasting, are slimmer.”
The Australian economy has lost pace amid a transition away from resources-driven growth following an unprecedented boom in mining investment that has helped stave off a recession for more than two decades.
“I think the improvement we’re seeing is catching up with the turnaround we’ve seen in business surveys and job ads,” Barclays chief economist for Australia Kieran Davies told Agence France-Presse.
“I think the economy looks to have picked up pace in the second-half of this year and the jobs market is starting to reflect that.”
The Australian dollar surged to 71.25 US cents after the data was released, before pushing higher to 71.49 US cents.
Economists also warned that monthly data can be volatile, noting that the statistics bureau had to readjust its data analysis methods last year over question marks about their accuracy.