Australian unemployment falls to 5.4%

The Australian Bureau of Statistics (ABS) has reported that the seasonally-adjusted unemployment rate has decreased by 0.2% to 5.4%.

According to the ABS, employment increased by a net 12,000 to 12.52 million people. However, according to the seasonally-adjusted statistics the number of full-time employees decreased by 20,600 whilst the number of part-timers increased by 32,600.

The changing pattern of work led to the seasonally-adjusted monthly hours worked decreasing by 24.2 million hours, or 1.4%.

Meanwhile, the number of people who’d like more hours sat at 13.9%.

These numbers are generally positive for Australia. It’s great news for companies reliant on a strong job market like Seek Limited (ASX: SEK), Commonwealth Bank of Australia (ASX: CBA) and Wesfarmers Ltd (ASX: WES).

However, I don’t think the Reserve Bank of Australia (RBA) is going to spring into action any time soon to raise rates based on the job numbers. In-fact if the economy were to decline it’s more likely to decrease the rate again.

The decrease in full-time employment is a little worrying and perhaps a growing trend of changing work habits. Part-time employment doesn’t provide as much income or security for households.

Some people might say we should ignore statistics, they are created from samples and estimates. But, the ABS can only do with the resources it has – it would be a hugely expensive exercise to know the actual number of employed people every month.

I’m happy that the unemployment rate has slightly come down, but I don’t think we’re going to crack a rate under 5% this year. A lower unemployment rate is one of the best drivers for sustainable wage growth.

Productivity gains would be another reason for wage increases, but that seems very hard to come by at the moment.

Foolish takeaway

If I were a CEO of a top ASX 20 company I’d be quite pleased with these figures. As long as the unemployment rate remains low mortgages will continue to be paid, landlords will receive their rent and shops will continue getting business. And hopefully shares keep performing.

To take advantage of Australia’s current economic position, I’d want to look at investing in these top stocks.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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