Aussie employment slips in December

SYDNEY: Australian employment fell unexpectedly in December, nudging the jobless rate up to 5.4% and pushing the local dollar down as the market narrowed the odds of further cuts in interest rates in coming months.

The local dollar lost a quarter of a US cent after the Australian Bureau of Statistics reported 5,500 net jobs were lost in December. That undershot forecasts of a flat outcome, though the previous month was revised up to show an increase of 17,100. All the losses came in fulltime employment which dropped 13,800 in December.

Analysts suspect the jobless rate will continue to creep higher from here, given sluggish domestic demand and the pressures of a historically high currency.

“It keeps rate cuts alive,” said Matthew Johnson, interest rate strategist at UBS. “You’d think the unemployment rate would be a bit higher, but it does seem fairly certain that the labour market is slackening.”

The market is pricing in at least one more easing in rates following the Reserve Bank of Australia’s (RBA) cut to a record-matching low of 3% back in December.

Interbank futures show a one-in-three chance of a move at the RBA’s next policy meeting on Feb 5, while swap rates imply an eventual move to 2.5% this year.

The RBA has forecast that unemployment would only rise “a little further” in coming months. Many analysts see a risk it could increase steadily toward 6% as a boom in mining investment begins to plateau later this year.

Even after the dip in December, annual growth in employment still picked up to 1.3%, from 1.1% in November, bringing it nearer the historical trend of around 1.6%. — Reuters