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Unemployment rate masks bleak jobs market

AAP logoAAP 17/11/2016 Marty Silk

A steady unemployment rate of 5.6 per cent is masking weakness in the labour market, and jobs growth is set to slow even further, economists warn.

The number of people with jobs rose by 9,800 in October, keeping the unemployment rate steady, the Australian Bureau of Statistics said on Thursday.

Full-time employment rose by 41,500 jobs while part-time jobs fell 31,700.

But the gain in full-time work was overshadowed by the bureau's revision to its September figures, taking that month's fall in full-time positions to 74,300 - the largest monthly fall on record.

October's participation rate, a measure of the number of people employed or actively looking for work, was flat at 64.4 per cent - the lowest level since 2005.

JP Morgan senior economist Tom Kennedy said the figures had much softer undertones than expected.

"Overall, today's release only confirms the view that the unemployment rate is overstating the strength in the labour market, with alternative measures of spare capacity, such as the composition of employment, the employment to population ratio and hours worked, all still soft," he said.

In the year to October, 90,000 full-time jobs were lost, while 133,000 part time jobs were created.

Commonwealth Bank senior economist Gareth Aird said overall employment growth had slowed to 0.9 per cent in the year to October, from 1.3 per cent in the year to September, and it was set to fall sharply again.

"Two weeks ago we flagged that employment growth was set to slow sharply, and it will almost certainly move lower again next month when the big reported increase in November 2015 drops out of the annual calculations," he said.

Citi economists expressed concern that more than half the full-time jobs lost in the past 12 months had been held my men.

"At least some of the drivers of this decline are structural as even in NSW, with the healthiest labour market, there has been a fall in male full-time employment," they said.

"Underemployment rates for males have been rising over the past few years, with a total increase in the past four years of almost two percentage points (from 5.3 per cent to 7.2 per cent)."

TD Securities chief Asia-Pacific macro strategist Annette Beacher said if the labour market was as weak as the data suggested, it is not going support strong, above-trend economic growth.

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