Australia’s jobless rate at decade high

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Jobless1 . File photo: Simphiwe Mbokazi.

Sydney - Australia's unemployment rate returned to a decade high of 6.0 percent in June, data showed Thursday, as the economy shed full-time posts owing to “challenging” conditions and as more people joined the jobs market.

The jobless rate pushed higher even as the economy added a seasonally adjusted 15,900 positions to take the number of people employed to 11.578 million, Australian Bureau of Statistics figures showed.

The rise in the total number of positions came through part-time roles, which jumped 19,700 last month.

Full-time jobs fell 3,800.

The May unemployment rate was revised upwards from 5.8 percent to 5.9 percent.

Economists were tipping the June jobless rate to reach 5.9 percent and for 12,000 positions to be created.

The Australian dollar spiked briefly at 94.51 US cents following the data release but slipped back to 94.18 cents soon after.

“Australian labour market conditions remain challenging,” ANZ senior economist Justin Fabo said.

“We saw a strong risk of an above-market rise in employment in June reflecting some statistical payback after the fall in employment in May.

“The 'payback', however, was less than we expected so it was, at best, a soft outcome.”

Fabo said one encouraging figure in the data was a rise in average monthly hours worked, which increased by 15.1 million hours to 1.629 billion.

Analysts said the participation rate, which measures the proportion of adults in work or looking for it, was behind the higher-than-expected increase.

The jobless rate had been falling slightly over the past few months after rising to 6.0 percent in February, the highest since July 2003, supported by an easing in the participation rate.

But the participation rate edged up by 0.1 percentage points in June to 64.7 percent, meaning more people were in the labour market looking for jobs.

Economists, the Reserve Bank and the Treasury had previously been expecting the unemployment rate to rise above 6.0 percent in 2014 as Australia exits an unprecedented boom in the mining sector.

The Reserve Bank has kept interest rates on hold at a record low of 2.5 percent since August last year in a bid to encourage growth in other sectors of the economy as mining investment falls off.

Despite the softer June reading, analysts said forward indicators showed a sufficient amount of jobs were being created to keep the unemployment rate steady at about 6.0 percent over the next few months during the economic transition.

But the level of jobs growth - estimated to be about 14,000-16,000 on average each month - was at the same time not strong enough to push the unemployment rate “consistently lower”, Commonwealth Bank of Australia senior economist Michael Workman said.

“It needs to be a little bit firmer than that - in the 18,000 to 20,000 a month category, but that is what we think is coming (at the end of the year),” he said.

RBA governor Glenn Stevens sounded a cautiously optimistic note on the jobs outlook in a speech last Thursday when he said the labour market has “shown some early indications of mild improvement”. - Sapa-AFP



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