October unemployment unchanged at 5.4% and better than forecast raises bar higher for December rate cut

The unemployment rate remained unchanged at 5.4% in October, according to the latest seasonally-adjusted ABS update.

This was better than market expectations of 0.1 percentage point rise in unemployment to 5.5%.

The unchanged unemployment figure will be noted by the RBA as it thinks ahead to its last monetary policy meeting of the year on December 4.

It will also note this week's September retail trade figure, which also rose above forecasts by 0.5%.

Commonwealth Bank chief economist Michael Blythe says “the door to further rate cuts is still firmly ajar” but says the emphasis will be on inflation, with the next CPI quarterly figure only out in January 23.

"The main impediment to lower rates, however, appears to have been the third quarter CPI readings that were 'slightly higher than expected'

"So the message from the RBA’s [November] decision to remain on the sidelines this month is that inflation trends have become a little worrying.  And the Bank will presumably want to wait for the next round of price readings in late January before deciding whether further rate stimulus is appropriate.  The February Board meeting looks to be the next 'live' meeting for policy action," he says.

CommSec chief economist Craig James says rate cuts alone may be insufficient to provide the stimulus necessary to keep economy growing at a trend pace and prevent the unemployment rate from rising.

“Confidence and expectations will be all-important on whether further rate cuts are required, he says.

In its labour force update, the ABS reported that over October, the number of people employed increased by 10,700 to 11,523,200 driven by a strong rise in full-time employment, up 18,700 people to 8,130,100 offset by decreased part-time employment, down 8,000 people to 3,393,100. 

The number of people unemployed decreased by 8,800 people to 653,200 in October.