SYDNEY: Australian unemployment spiked in October as the economy unexpectedly shed jobs, signalling a delay in the labour market’s bounce-back from lockdowns and underscoring the need for ultra-low interest rates.

       The jobless rate advanced to 5.2% from 4.6% in September and above economists’ forecast of 4.8%, Australian Bureau of Statistics data showed yesterday.

       Employment dropped by 46,300 roles, its third monthly decline, compared with economists’ estimate for a 50,000 increase.

       Australia’s benchmark three-year bond yield briefly trimmed gains before trading up 15 basis points at 1.05% while the 10-year yield was up 10 basis points at 1.83%. Traders scaled back bets on rate increases.

       The weaker jobs result is something of a reprieve for the Reserve Bank of Australia (RBA), which has been under pressure from the bond market over faster consumer-price growth against a backdrop of rising global inflation concerns.

       That narrative was only reinforced when the United States consumer prices rose last month at the fastest annual pace since 1990.

       “Many of the workers who were unable to work during lockdowns re-entered the labour force in early October to look for work, leading to a spike in the unemployment rate,” said Sarah Hunter, chief economist for BIS Oxford Economics.

       The fall in employment was concentrated in Victoria state which “likely reflects the tail end of restrictions on activity,” she said.

       Employment in Victoria fell by 49,600 people, while New South Wales posted an increase of 21,700.

       The release covered the period from Sept 26-Oct 9, when Sydney and Melbourne were only about to emerge from months-long lockdowns.

       The RBA is running record-low rates to support the economy and ultimately aiming to push down unemployment in order to spark faster wages growth.

       The RBA sees this as its best means to return inflation sustainably to the midpoint of its 2-3% target, which policy makers expect will take about two years.

       Markets are more optimistic on the recovery and are challenging that view by pricing in a tightening cycle beginning next year.

       Yesterday’s jobs report, while only one month, is likely to add ballast to governor Philip Lowe’s view that rates are only likely to rise from the current 0.1% in 2024.

       Part-time roles fell by 5,900 while full-time positions dropped by 40,400. The participation rate edged up to 64.7% in October from 64.5%.

       Under-employment increased 0.3 percentage point to 9.5%.

       Under-utilisation climbed by 0.9 percentage point to 14.7%. The employment to population ratio fell to 61.3%. — Bloomberg