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AAP

2012-11-08

A moderate rise in total employment and a steady unemployment rate show that Australia's labour force is improving slowly, while businesses remain cautious.

Official figures show that Australia's unemployment rate remained steady at 5.4 per cent in October.

Total employment rose 10,700 to 11.523 million in October, according to the seasonally-adjusted figures released by the Australian Bureau of Statistics on Thursday.

The forecast was for total employment to rise by 5,000 and an unemployment rate of 5.5 per cent, according to the median of 16 market economists surveyed by AAP.

CommSec economist Savanth Sebastian said the numbers showed little incentive for companies to hire or create jobs in the current environment.

"What it highlights is that the job market is just going sideways. It's been pretty sluggish," he said.

"But, I think there are downside risks that employment has weakened, since we've seen job advertisements fall for seven consecutive months.

"I think businesses are finding conditions tough, profitability's been squeezed, and they're not actively looking to hire in this environment."

JP Morgan Australia chief economist Stephen Walters said the rise in employment was not enough to keep up with population growth.

"So, we were a bit lucky that the participation rate went down. If it hadn't, you would have got a slightly higher unemployment rate," he said.

"It's not a terrible number, but it's not a great number. It's sort of middle of the road.

"We think you're going to get softer numbers than that over the next few months, so unemployment will be a little higher over the next few months."

Mr Walters said he still expected the Reserve Bank of Australia (RBA) to cut the cash rate in December and February.