- POSTED: 07 Aug 2014 14:28
Australia's unemployment rate spiked to a 12-year high of 6.4 per cent in July, data showed Thursday (Aug 7), lowering expectations of a near-term hike in interest rates as the economy shows signs of weakness.
SYDNEY: Australia's unemployment rate spiked to a 12-year high of 6.4 per cent in July, data showed Thursday (Aug 7), lowering expectations of a near-term hike in interest rates as the economy shows signs of weakness.
The surprise jump in the jobless rate, which was up from the decade-high of 6.0 per cent in June, saw 300 positions lost from the economy, the Australian Bureau of Statistics said. Full-time positions increased by 14,500 but 14,800 part-time roles were shed. Analysts had expected 12,000 jobs to be added in the month. The number of unemployed rose by 43,700 to 789,000 in July.
The Australian dollar lost more than half a cent after the data was released, falling from 93.55 US cents to 92.96 US cents.
The participation rate, which measures the proportion of adults in work or looking for it, lifted by 0.1 percentage points to 64.8 per cent.
Economists said the figures, which were well above consensus forecasts of 6.1 per cent, were worse-than-expected. The latest data also meant Australia's jobless rate was above the United States' for the first time since 2007. But they cautioned against reading too much into the report, saying it could be a "noisy print" -- a fluctuation that reflects the volatility of month-to-month data.
"When we juxtapose that rise in the unemployment rate with where we think trend employment growth is growing, which is about 10,000 (jobs) per month, it's hard for us to envisage an unemployment rate of 6.5 per cent as the right trend," Deutsche Bank senior economist Phil O'Donaghoe told AFP. "You can never put too much faith in one month's data."
WEAKNESS COULD BE 'OVERSTATED'
ANZ senior economist Justin Fabo said the headline number could be overstating the weakness of the labour market, pointing to other employment indicators which have suggested that companies' hiring intentions were improving.
"Most other labour market indicators are improving, at least slowly, so the jump in the unemployment rate does look odd in that regard," Fabo said. "We'll need the August report to confirm that view." Fabo said a change in the population sampled by the statistics bureau for the report appeared to have contributed to the higher reading.
The ABS noted in its release that the "incoming rotation group for July 2014 had a lower proportion of employed persons and a higher proportion of unemployed persons compared to the sample it replaced". "Therefore the incoming rotation group contributed more persons to the labour force and to the increased unemployment rate."
The July data came two days after the Reserve Bank of Australia kept interest rates at a record low of 2.5 per cent, marking a year since the central bank last cut them to stimulate the economy as it shifts away from a dependence on mining-led growth. The RBA said Tuesday that "there has been some improvement in indicators for the labour market this year, but it will probably be some time yet before unemployment declines consistently".
Analysts said the new jobs figures on their own were unlikely to alter the Reserve Bank's economic outlook. "These numbers bounce around a fair bit, so you'd need something that's on a trend, rather than just 'it's hit 6.5 (percent) and bang, they cut (rates)'," the National Australia Bank's chief economist Alan Oster said.
The RBA will publish its quarterly outlook on the Australian economy and monetary policy Friday.