What’s Happened?

The September 2019 data produced by the ABS showed a decline in the unemployment rate from 5.3% in August to 5.2% in September. With this, the underemployment rate (people who are in work but want more work) fell 0.2% to 8.3%.

Seasonally adjusted employment increased by 14,700 people, with full time employment bouncing back by 26,200 people and part-time employment decreasing by 11,400 people.

What Does This Mean For Investors?

I think this latest set of data is pretty good news for the Australian economy. Economists had been expecting the unemployment rate to stay at 5.3%, so the rate dropping back to 5.2% is good news. The unemployment rate had briefly gone below 5% in recent times, but it’s slowly been creeping upwards.

The rising unemployment rate was one of the main reasons why the Reserve Bank of Australia (RBA) has felt so compelled to reduce interest rates. Perhaps these latest figures mean we won’t see another rate cut this year.

Overall, the decline in the unemployment rate should mean good things for the economy. The strength of Australia’s economy is based on most people being employed, having an income and spending money. Less people employed would mean less money going round the system.

However, I don’t think we need to make any investment decisions purely based on today’s statistical news, as macro events are not a very good indicator for share prices. Nonetheless, I do think it’s good news for Australia as a whole that unemployment has slightly fallen, at least for now.

At the time of writing, Jaz has no financial interest in any of the companies mentioned.