Questions remain despite jobless fall

SYDNEY: Demand for labour is booming - or is it?

The January labour force data last month, to be updated with February figures on Thursday, revealed a stunning fall in the unemployment rate.

At 5.3 per cent in seasonally adjusted terms, it was half a percentage point lower than the peak of 5.8 per cent reported by the Australian Bureau of Statistics in October.

The rise in employment, or the number of people with jobs, was equally impressive. The rise of 52,700 or 0.5 per cent was the biggest since December 2006.

And it was no flash in the pan - the average increase in the four preceding months was 35,500, double the monthly average for the preceding decade.

But there are doubts about this labour market strength.

The economy has been growing below its long-term average, making above-average employment growth seem more than a little incongruous.

The 2.7 per cent growth through 2009 was faster than expected, but still less than the long-term average of around three and a quarter per cent.

It could be a statistical blip, but it puts a question mark over the strong-looking estimate of employment.

Employers' need for labour may not be increasing nearly as quickly as the bottom line employment total suggests.

Economists will be looking to the February labour force data to shed some light.

- AAP