SENIOR economist Saul Eslake says it is hard to explain why Tasmania's unemployment rate is on the way down, when the number of jobless people across the country is on the rise.
Australian Bureau of Statistics data released yesterday revealed that in trend terms, the state's unemployment rate fell to 7.7 per cent in December and remained at 5.8 per cent nationally - leaving 716,000 people without a job.
Mr Eslake said Tasmania's unemployment figures had dropped 0.5 per cent in the past six months, which showed signs of recovery from the "recession it was in for 2012-13".
However, he said the state's decline in unemployment was due to a fall in the participation rate to 0.4 per cent points - its lowest level since January 2005.
Mr Eslake said in the second half of last year, the state's employment base fell by almost 3000 jobs.
"There is some suggestion that the falling full-time employment may have levelled out over the second half of last year - full- time employment fell by 1000," Mr Eslake said.
He said better conditions in the farming sector, housing finance, record tourism numbers, a fall in the Australian dollar and the state government's $30,000 first home builders grant could be behind Tasmania's improvement.
Premier Lara Giddings welcomed the drop but admitted there was still work to do.
"The unemployment rate has now fallen for five consecutive months and nearly 2000 fewer people are in the unemployment queue following a peak of 8.3 per cent last year," she said.
Opposition treasury spokesman Peter Gutwein said 300 Tasmanian jobs disappeared during December.
"The unemployment rate is going down because people are giving up looking for work," Mr Gutwein said.
"In fact, if Tasmania's participation rate was at the national level, our unemployment rate would actually be over 15 per cent."