Aus­tralian un­em­ploy­ment spikes to 6 per­cent

The Pak Banker - - BUSINESS -

Aus­tralia's un­em­ploy­ment rate un­ex­pect­edly climbed in Jan­uary as full-time em­ploy­ment slumped by the most since 2013, re­flect­ing wan­ing stim­u­lus from record-low in­ter­est rates and a weaker cur­rency. The lo­cal dol­lar fell about one-third of a U.S. cent. Job­less rate rose to 6% from 5.8%; econ­o­mists pre­dicted 5.8%. Em­ploy­ment fell 7,900 from De­cem­ber; econ­o­mists fore­cast 13,000 gain. Full-time jobs dropped 40,600; part-time em­ploy­ment gained 32,700

Par­tic­i­pa­tion rate, a mea­sure of la­bor force in pro­por­tion to the pop­u­la­tion, was un­changed at 65.2%, match­ing econ­o­mists' fore­casts. Em­ploy­ment has fallen af­ter record- ing the big­gest quar­terly gain on record at the end of 2015. That surge drew re­newed skep­ti­cism about the ac­cu­racy of la­bor force data, which the Aus­tralian Bureau of Sta­tis­tics has ac­knowl­edged in the past.

The fig­ures are "prob­a­bly just a con­tin­u­a­tion of the data mov­ing back to re­al­ity af­ter the un­be­liev­able strength late last year rather than a sign that the con­cerns over the global econ­omy are giv­ing Aus­tralian em­ploy­ers the jit­ters," said Paul Dales, chief econ­o­mist for Aus­tralia and New Zealand at Cap­i­tal Eco­nom­ics. "A re­newed and sus­tained de­te­ri­o­ra­tion in la­bor mar­ket con­di­tions would bring rate cuts back onto the ta­ble."

Aus­tralian pol­icy mak­ers have paused rates at a record-low 2 per­cent for the past nine months as they al­lowed stim­u­lus from prior eas­ing to work through the econ­omy. The Re­serve Bank of Aus­tralia en­joyed some luck in 2015 with ser­vices in­dus­tries in­clud­ing education and tourism boost­ing hir­ing as firms cap­i­tal­ized on the weaker cur­rency, even as eco­nomic growth re­mained below its 30-year av­er­age.

Aus­tralia, the most Chi­nade­pen­dent econ­omy in the de­vel­oped world, is grap­pling with fall­out from plung­ing prices of its key com­mod­ity ex­ports and an un­wind­ing of re­source in­vest­ment. Mar­ket wob­bles in China have seen the share­mar­ket in the world's se­cond-largest econ­omy tum­ble, cap­i­tal flee at a record pace and the slow­est ex­pan­sion last quar­ter since 2009, all leav­ing the econ­omy Down Un­der vul­ner­a­ble.

To­day's re­port showed New South Wales and Vic­to­ria, the east coast states that have led the econ­omy with hous­ing con­struc­tion booms, recorded the big­gest job losses in Jan­uary with 13,400 and 9,000 re­spec­tively. New South Wales's un­em­ploy­ment rate climbed to 5.5 per­cent from 5.2 per­cent and Vic­to­ria's to 6.3 per­cent from 6 per­cent.

Queens­land, which has a sub­stan­tial re­source in­dus­try where in­vest­ment is un­wind­ing and com­mod­ity prices fall­ing, recorded a jump in job­less­ness to 6.4 per­cent from 5.9 per­cent. The lo­cal dol­lar traded at 71.60 U.S. cents at 4:40 p.m. in Syd­ney, from 71.77 cents be­fore the data was re­leased. Traders are pric­ing in about a 50 per­cent chance the RBA will cut rates in May.

Re­flect­ing the end of the re­source con­struc­tion boom and lower com­mod­ity prices, Aus­tralian steel and iron ore pro­ducer Ar­rium Ltd. said Wed­nes­day it had cut 300 jobs. "The RBA has placed a great deal of em­pha­sis on, and taken a lot of com­fort from, the im­prove­ment in la­bor mar­ket con­di­tions," said Justin Fabo, se­nior econ­o­mist at Aus­tralia & New Zealand Bank­ing Group Ltd. "The bank is un­likely to be sur­prised by the pull­back in the jobs fig­ures given the pre­vi­ous su­per strength and ques­tions sur­round­ing data qual­ity, so more data will be needed to get a clearer pic­ture."

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