Unemployment rate in surprise fall, lowering chance of interest rate cut The jobless rate has fallen to a surprise 5.6 per cent, further reducing the odds of another rate cut by the Reserve Bank next month. The economy added 9100 jobs in September as the unemployment rate slipped from August's four-year high of 5.8 per cent. The aggregate monthly hours worked fell to 1.6 billion hours. RBA 'likely to remain on hold' in November Financial markets pared back their expectations of a November rate cut to 11 per cent from 18 per cent yesterday, Credit Suisse data showed. "Today's data and the slight improvement in the suite of other labour market indicators are consistent with the RBA being on hold for several months," ANZ senior economist Justin Fabo said. The recent improvement in confidence and stabilisation in labour market conditions is welcome, but is still only tentative evidence that economic activity is improving from below-trend rates rather than just stabilising. NAB senior economist David de Garis said the employment numbers might have been flattened by temporary employment during the federal election. But he said there was "no fuel" in today's figures to increase the odds of an RBA cut in November. "The RBA will be sitting on their hands for another month come Melbourne Cup day," Mr de Garis said. Why is the participation rate falling? While the unemployment rate fell to a level last seen in May, the participation rate - the percentage of people either in work or looking for work - has continued to slide over the past few months to hit 64.9 per cent in September, an almost seven-year low. According to research by TD Securities, if the participation rate remained at its end-2011 level of 65.5 per cent, with everything else equal, the jobless rate would be at 6.6 per cent in September. "The RBA is likely to now focus on uncovering the drivers behind this steady fall in the participation rate over the past three years, to gauge if this downturn is a cyclical or structural phenomenon," TD Securities head of Asia-Pacific research Annette Beacher said JP Morgan economist Ben Jarman added that the increase in jobs growth remained anaemic. We've only added 9100 jobs after two contractions in the row. So nothing's really changed in terms of hiring appetite - it still looks very depressed," he said. States and territories breakdown It remains the lowest rate in the country. "This employment is likely to reflect continued strengthening in housing construction but also a modest rise in some non-residential building activity," Mr Fabo said in a research note this morning.