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Jobs boom spells rate rise -

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ELEANOR HALL: First to the economy and there's good and bad news for job seekers this lunchtime.

Australia added nearly 25,000 new jobs to the labour force in October.

But despite this the unemployment rate has gone up to 5.8 per cent, with the economy failing to add
enough new jobs to meet demand.

But while the employment numbers are mixed, it's bad news for debtors. The dollar surged when the
employment figures were released as investors anticipated more interest rate rises.

Joining me with the details is our economics correspondent Stephen Long.

So Stephen, the unemployment rate is up but there are more jobs. Good news or bad news for

STEPHEN LONG: Both Eleanor but I would say on balance that it's good news. What we've seen is
24,500 jobs added this month, albeit most of them part-time, and 60,000 jobs added to the economy
in just two months.

Now that is a pretty extraordinary result by global standards. If you look at most of the advanced
economies they're still shedding jobs at a rate of knots.

Now the unemployment rate went up and this is the bad news because we are not creating enough jobs
to meet a growing population and a larger labour force with 160,000 immigrants a year coming into

And young people leaving education and entering the workforce, we're not creating enough employment
to actually meet that growing labour force and that growing population.

But the fact that we're actually creating jobs in the current environment globally must be seen as
pretty positive for job seekers.

ELEANOR HALL: Is unemployment, the unemployment rate though likely to keep rising or is the job
creation likely to catch up with it in the next few months?

STEPHEN LONG: Well it's likely that the unemployment rate will keep rising but it won't hit the
peaks that were feared some time ago and it may not hit even more recent paired back forecasts of
say 6.5 per cent that we've seen and that's again quite extraordinary.

But there's bad news in this as well because when you have employment growing so strongly the
Reserve Bank is going to be pretty, pretty toey about rates.

ELEANOR HALL: So we could see rising unemployment and rising interest rates?

STEPHEN LONG: Very much that's on the cards. If we have the trend continuing as it is now the
Reserve Bank will be looking at the strong employment growth, 24,500 jobs this month on top of
strong jobs growth in the previous month.

And if this keeps going they will think there's going to be more money in people's pockets and they
need to jack up rates perhaps harder and faster than they've indicated with their notions of
gradual easing and gradual lessening.

ELEANOR HALL: There was a lot of talk that if the unemployment rate went down today we would see an
interest rate rise in December but just because the interest rate, the unemployment rate has gone
up does that mean the interest rates will remain stable in December or will the Reserve Bank be
looking at this and thinking they need to move?

STEPHEN LONG: It's really an open bet at this stage. Certainly the markets, when you saw that
reaction of the dollar going up, that was in anticipation that rates are likely to go up in

And the reaction of market economists, the pundits who get paid for advising investors on what to
do with their money, are saying, for what it's worth, that this is a great result for employment
but it really puts the pressure on interests rates.

And the Reserve Bank is likely to see this as another evidence, another bit of evidence that the
downturn is not nearly as severe as they first thought and they've got reason to push ahead with
higher interest rates sooner rather than later.

ELEANOR HALL: So Stephen, when you look at the employment numbers does a pattern emerge breaking it
down state by state?

STEPHEN LONG: Well it's quite interesting on that front Eleanor because what we've seen is a
reversal of the recent pattern where the mining states had been hit as the commodities boom seemed
to be waning.

Now Western Australia has enjoyed a very big fall in unemployment down from 5.7 per cent to 5 per
cent and New South Wales has had the worst performance with the unemployment rate back up to 6.1
per cent - its August levels - from 5.5 per cent in September, although there were actually more
jobs created in that state.

Stephen Long, our economics correspondent, thank you.