Surprise rise in new jobs

[Badshah Mamun]

Surprise rise in new jobs

By Chris Zappone

The unemployment rate edged up last month but a surprise gain in new jobs added to the likelihood that interest rates will rise again in December.

The unemployment rate rose to 5.8 per cent in October from 5.7 per cent in September, according to the Australian Bureau of Statistics.

Total employment, though, rose by 24,500 - all but 2,900 of them part-time positions - confounding expectations that the economy had shed jobs in the month.

"Two consecutive months of job gains are very difficult to ignore and now represents one less hurdle the RBA has to worry about before what we see as a likely rise in December," said 4Cast Ltd economist Michael Turner.

While extra jobs will be good news for those hunting for work, the increasing risk of a long series of interest rate rises may dishearten borrowers.

Financial markets immediately raised their bets that the Reserve Bank will make it three rate rises in as many months when its board next meets on December 1.

Another 25 basis-point rise to 3.75 per cent by the RBA is almost a certainty - while odds are now pointing to at least seven more such rises over the coming 12 months - to 5.5 per cent, Credit Suisse data shows.

The Australian dollar also leapt on the news, jumped more than half a US cent to its highest level since August 2008, hitting 93.67 US cents.

Stocks, meanwhile, extended their gains for a fifth day as optimism about the economy grows.

Nearing peak

A consensus of analysts had expected October's unemployment rate to rise to 5.8 per cent with the economy shedding 10,000 jobs, which would have returned it to a level it had been at in three of the four past months.

''We can pretty much say with a greater degree of confidence that we?re at the peak of the unemployment rate,'' said ICAP economist Adam Carr.

''Or extremely close to it.'' ''We?ll probably see the RBA and Government revise down their peak yet again early next year towards the low 6 per cent level, if that,'' he said.

''There are plenty of people in the RBA who will be urging a 50-basis-point hike in December,'' Mr Carr said, however he thinks a hike in February - after the RBA board returns from a January break - would be more likely if we ''continue to see data of this nature''.

NSW bucks the trend

The positive news was not evenly spread, however, with New South Wales reporting a big jump in its jobless rate last month while mining states reported sharply fall levels of unemployed.

In NSW, unemployment rose to 6.1 per cent in October from 5.5 per cent in September, seasonally adjusted, the ABS said.

Unemployment was unchanged in Victoria at 5.7 per cent over the same period. In Queensland the rate fell to 6 per cent in October from 6.3 per cent in September.

While in South Australia the unemployment rate fell to 5.3 per cent from 5.7 per cent.

In Western Australia the rate tumbled to 5 per cent in October from 5.7 per cent in September, as demand for resource projects drew in more workers.

In Tasmania, the rate remained flat at 5.4 per cent over the two months.

Published: 12 November 2009

Source: http://content.mycareer.com.au/advice-research/search/surprise-rise-new-jobs.aspx