Unemployment in Australia has dropped to its lowest level in four-and-a-half years.
Last month the unemployment rate fell to 5.4 per cent but economists were disappointed to see that despite this, only 3,700 new jobs were created.
Paul Dales from Capital Economics told ABC that despite the falling unemployment rate in October, wage growth was likely to remain very slow.
“As yesterday’s release of the wage price index for the third quarter showed, this tightening in the labour market has not yet started to boost wage growth,” he said.
“And the lesson from overseas is that even if the unemployment rate fall further, wage growth still won’t rise much.”
The fall in unemployment was unexpected from many economists and was largely due to a fall in the participation rate of working age men.
As for wages, they rose by just 0.5 per cent in the three months to September which was below market expectations.
CommSec chief economist Craig James said although wage growth was still above inflation, the slow growth figures were still a bad result.
“Wage earners are still adjusting to the ‘new black’ of wage growth near two per cent rather than 3.5-4.0 per cent,” he told News.com.
“Wages are growing at a slower pace because globally challenged businesses are reluctant to lift prices on the fear of losing sales.”