The Australian Bureau of Statistics (ABS) has just reported the unemployment data for September showing that the unemployment rate declined, what does this mean for ASX shares?
What Happened To The Unemployment rate?
The September 2019 data produced by the ABS showed that the unemployment rate declined from 5.3% in August to 5.2% in September, with the underemployment falling 0.2% to 8.3%.
Seasonally adjusted employment rose by 14,700 people with full time employment bouncing back by 26,200 and part-time employment decreasing by 11,400.
What Does This Mean?
I think it’s pretty good news for the Australian economy. Economists had been expected the unemployment rate to stay at 5.3%, so it dropping back to 5.2% is good news. The unemployment rate had briefly gone below 5% in recent times but it had slowly been creeping upwards.
The rising unemployment rate was one of the main reasons why the Reserve Bank of Australia (RBA) has felt so compelled to reduce interest rates. Perhaps that means we won’t see another rate cut this year?
It should mean good things for the economy. The strength of Australia’s economy is based on most people being employed, having an income and spending money. Less people employed would mean less money going round the system.
What Has Happened To ASX Shares?
The ASX 200 (ASX: XJO) has dipped in response, currently down by 0.3%, perhaps because lower interest rates are a little less likely. The Commonwealth Bank of Australia (ASX: CBA) share price is down 0.1% and the Westpac Banking Corp (ASX: WBC) share price is down 0.2%.
Employment site business SEEK Limited (ASX: SEK) has gone up 0.9% – more people being employed could mean more jobs on its website, more revenue and more profit.
I don’t think we need to make any investment decisions based purely on today’s statistical news, macro events are not a good indicator for share prices. But I do think it’s good news for Australia as a whole that unemployment has slightly fallen, at least for now.
Whatever happens with the economy, I’d want to make sure my portfolio has plenty of reliable shares like the ones in the free report below.
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