The unemployment rate has fallen from its 13-year high, but don’t expect it to fall too much further anytime soon.
A combination of strong jobs growth and a fall in the number of people looking for work helped push the unemployment rate to 6.2 per cent in August, from 6.3 per cent the previous month.
There are an extra 167,000 people with jobs so far this year, at an average monthly gain of just under 21,000.
Employment growth was 17,400 in August, less than half the 39,200 gain recorded in July, the Australian Bureau of Statistics said on Thursday.
JP Morgan economist Ben Jarman said it is surprising that unemployment has remained fairly stable so far this year.
“If you look over the last few months, there’s been a pretty solid average pace of jobs growth,” he said.
“There doesn’t seem to be much upward momentum with the unemployment rate; it seems to be levelling out.”
Even though the annual rate of economic growth is well below its long-term average at two per cent, Mr Jarman said it is still enough to keep unemployment steady.
As a result, an interest rate cut is less likely.
“We think that message will be important for the Reserve Bank in the near term, because we think, if unemployment is relatively steady, then they will stay on the sidelines,” he said.
However AMP Capital chief economist Shane Oliver said the jobs market is not as strong as it appears.
“It’s hard to see jobs growth being sustained at the two per cent annual pace seen over the last year and so jobs growth is likely to slow in the months ahead, which is likely to see the modest rising trend in unemployment resume,” he said.
Another problem the jobs market has, Dr Oliver said, is the number of people who are underemployed, or wanting more work, remains high at 14.3 per cent.
The annual rate of part-time employment growth at three per cent, continues to outpace growth for full-time work, which is two per cent.
St George senior economist Janu Chan said strong part-time growth and slower wage rises are helping employment growth appear solid.
“While we couldn’t rule out the risk of the unemployment rate could edge higher, it does appear that the unemployment rate should remain broadly stable over the coming year,” she said.
“Given the outlook for growth remaining below trend, there is still a risk that the labour market could adjust to weaker growth down the track.”
Ms Chan said the stable unemployment rate will give the RBA more reason to keep the cash rate unchanged into 2016.