Today’s national jobs report for September was better than economists had anticipated. The near-20,000 gain in employment last month was larger than the consensus forecast of 15,000 places, and the jobless rate unexpectedly dropped to the lowest level since February 2013. Moreover, recently released leading indicators, like the ANZ job ads series and the employment component of the NAB business survey, hint at further improvement in the months ahead.

In fact, Australia’s labour market is turning in its best performance for some years. More than 290,000 jobs have been created this year alone - the annual rate of jobs growth has accelerated to a nine-year high of 3.1%oya. This healthy rate of job creation is yet to feed into a materially lower unemployment rate, but this is mainly because more people are entering the labour force.

On the details, employment rose by a net 19,800 places last month, after a 53,000 gain in August. The dark lining on this otherwise silver cloud was that most of the job gains in September were part time positions (up 13,700). Full time employment rose only 6,100 places, but this comes after a near-40,000 gain in August.

The unemployment rate dipped to 5.5% last month - economists had expected an unchanged rate at 5.6%. By state, New South Wales had the lowest jobless rate at 4.6% in September, down from 4.9% in August. Victoria’s unemployment rate slipped to 6.0%, but this remains the highest rate of all the states. The jobless rates in Queensland and South Australia both rose, but there were falls for Western Australia and Tasmania.

The main takeaway for directors is that the improvement in the labour market has been sustained now for the best part of a year, so this is no flash-in-the-pan. Indeed, the sustained lift in employment is matched by improving business investment intentions and higher business confidence, so the trends all seem consistent. The downside of this, though, is that firmer economic activity solidifies the expectation that interest rates will be rising next year.

Unemployment rate