THE Australian economy added just 1,100 jobs in October, but recent retail spending and housing data could be a sign improvement is on the way.
October's unemployment rate was steady at 5.7 per cent, after the September rate was revised up from 5.6 per cent, the Australian Bureau of Statistics said on Thursday.
A year ago the unemployment rate was 5.3 per cent.
AMP chief economist Shane Oliver said the labour market has been disappointing over the past few months.
"The jobs market remains very weak," he said.
"The weakness in the labour market is highlighted by a continuing switching in jobs from full time to part time as companies seek to contain costs."
Full time employment fell by 27,900 in October, while part time employment rose by 28,900, the ABS said.
But Dr Oliver is confident employment growth will strengthen, saying recent jobs figures reflect the weakness in the economy over the past 12 months.
"It's important to note that employment is a lagging indicator of the economy," he said.
"With leading economic indicators like prices for houses and shares, housing construction approvals and business and consumer confidence on the rise, this suggests that jobs growth should start to improve sometime around mid-next year."
The participation rate stayed at a seven year low of 65.8 per cent in October, which Dr Oliver said is a sign job seekers are getting discouraged, preferring to stay in education or take early retirement.
RBC Capital Markets senior economist Su-Lin Ong said the employment figures wouldn't worry the RBA, nor spark a rate cut in the short term.
"They've been talking about a softer labour market and a likely increase in the unemployment rate," she said.
"I think it provides a bit of a reminder that the easing bias by the RBA, modest as it is, remains intact."
Ms Ong expects the unemployment rate to move towards six per cent in the short term.
"A lot depends on participation, that continues to slide," she said.
"But there's more to the employment market than the unemployment rate, when you look at the range of labour market indicators from employment to population, through to participation, the labour market is pretty soft."
JP Morgan economist Ben Jarman said there are worrying signs the Australian economy's transition away being driven by mining investment might be a little bumpy.
"Firms appear reluctant to step up hiring until they see evidence of consumer uplift, and consumers are concerned about waning income growth and reluctant to draw down on savings," he said.
"To the extent that hiring and investment are correlated, today's numbers also are not too favourable in terms of the hoped for lift in non-mining business investment."
The Australian dollar dropped by about half a US cent when the jobs data was released, below 95 US cents.
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