The Reserve Bank of Australia (RBA) Governor Glenn Stevens said on Thursday that the Australian labour market was improving.

"The demand for labour increased at an above average pace in 2015. The number of people employed, as measured, increased by well over 2 per cent, participation in the labour force picked up and the rate of unemployment declined, to be below 6 per cent. That is a noticeably better outcome than we expected a year ago," he said.

The RBA governor noted that monetary policy easing and a weak Australian dollar supported the economy, adding that the economy was expanding at a modest pace.

He said that the central bank could ease its monetary policy further if needed.

Stevens pointed out that the recent market turmoil was not caused by economic factors.

"Markets are dropping their bundle. There are some latent issues that have been there all along, actually, on which people have now chosen to focus more strongly than they were a couple of months back," he said.