Australia jobless at 26-year low

John Howard won the election on security and economic issues

Australia's jobless rate is at a quarter-century low, giving a further reward to Prime Minister John Howard following his recent election victory.

Unemployment in October was 5.3%, the lowest rate in 26 years of monthly surveys and only just above 1977's all-time low of 5.2%.

The news will help the government claim that a surprise loss of jobs in August was a "blip".

At the same time, New Zealand announced an 18-year low in its own jobless rate.

New Zealand's 3.8% unemployment rate - one of the lowest rates of any industrialised economies - accompanies economic growth of about 4%.

Structurally, unemployment has moved down a notch Peter Costello, Treasurer

It could spell slower growth ahead, economists warned, since the tight labour market could mean capacity constraints would deteriorate.

Interest rates

For Australia, the news from the Australian Bureau of Statistics showed a rise in seasonally adjusted employment of 106,900 in the past two months.

That compares to only 10,900 in July and August.

The participation rate - the number of people in work or actively seeking it - was also up.

According to Peter Costello, Australia's treasurer (finance minister), the trend was evidence that the economy had undergone a long-term shift to lower joblessness.

"Structurally, unemployment has moved down a notch," he said.

But further falls would require more reforms, he warned.

Falling employment can sometimes trigger concerns about interest rates, already higher in Australia than elsewhere in the industrialised world.

But economists said Australia's central bank would probably hold off till it became clear whether wages were picking up speed as the job market tightened.

"(The Reserve Bank) won't just move on the unemployment rate alone," said Stephen Halmarick, economist at Citigroup in Sydney.

Australia's economy is currently growing at an annual rate of about 3.75%, according to the International Monetary Fund.