Australia’s jobless rate jumped to a 12-year high in July, surpassing the U.S. level for the first time since 2007 and sending the local currency tumbling.
The unemployment rate rose to 6.4 percent from 6 percent, the statistics bureau said in Sydney today, versus the median estimate for unemployment to hold steady in a Bloomberg News survey of economists. The number of people employed fell by 300.
The data underscore a division in policy outlook between the Federal Reserve, which markets bet will tighten next year, and the Reserve Bank of Australia’s flagged period of stability for its record-low benchmark. Australia is losing its developed-world-beating status as the mining investment boom that powered it through the global financial crisis wanes.
“It’s been a long time since Australia has had that kind of number,” said Michael Blythe, Sydney-based chief economist at Commonwealth Bank of Australia. “Most other countries have unemployment figures trending down, but our number is edging higher. This is quite a significant divergence from our trend.”
The number of full-time jobs increased by 14,500 in July, and part-time employment fell 14,800, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, climbed to 64.8 percent in July from 64.7 percent a month earlier, it showed.
The Australian dollar dropped and was trading at 92.87 U.S. cents at 2:16 p.m. in Sydney, from 93.43 cents before the data were released.
In a largely unchanged statement accompanying this month’s rate decision, RBA Governor Glenn Stevens said “the exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth.”
Traders are pricing in 6 basis points of cuts to the benchmark rate over the next 12 months, compared with 3 points of increases earlier in the day, according to an index of swaps from Credit Suisse Group AG in Sydney.
The data “validates the RBA’s desire for a period of stability that it’s been talking about for the last few months,” Blythe said.
The statistics bureau said in today’s release that a new sample of respondents to the jobs survey “had a lower proportion of employed persons and a higher proportion of unemployed” than the one it replaced. The change in the sample group “contributed about one-third of the absolute change in the number of persons unemployed and 40 percent of the absolute change in male unemployment,” it said.
Unemployment climbed along the nation’s eastern seaboard, according to the bureau, with the jobless rate in the manufacturing hub of Victoria climbing to 7 percent from 6.6 percent. In the northern state of Queensland, the rate rose to 6.8 percent from 6.3 percent while unemployment in New South Wales, Australia’s most populous state, increased to 5.9 percent from 5.7 percent. In the mining center of Western Australia, joblessness rose to 5.2 percent from 5 percent, the release showed.
The Australian Broadcasting Corp. reported in June that BHP Billiton Ltd., the world’s biggest mining company, plans to cut as many as 3,000 jobs from its iron-ore division. About 500 jobs have already been cut in recent months including 100 at its headquarters in Perth, according to the report.
Boeing Co., the world’s largest planemaker, said in April it will cut about 300 jobs in its Australian unit. Boeing’s April 3 statement came a day after BP Plc and Philip Morris International Inc. announced more than 500 in combined job cuts and the closure of plants.
Australia’s unemployment rate fell to as low as 4 percent in 2008 and the country managed to avoid a recession the following year when U.S. joblessness climbed to 10 percent. A mining investment boom driven by Chinese demand for resources and government stimulus helped shield Australia as most developed-world countries slipped into recession in 2009.
Stevens and his board cut Australia’s benchmark rate to a record low in an almost two-year easing cycle through August 2013 as they sought to spur industries including residential construction to soak up spare labor from mine construction.
Consumer confidence in Australia fell in May to its lowest level since August 2011, prior to the central bank’s most recent easing cycle, after the government’s budget flagged spending cuts and a new tax on high-income earners and has remained subdued since.
“Unemployment actually jumped to 789,000 after what was a flat trend,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. “We need to see this indicator fall over the coming months as a trigger for the RBA to shift away from its entrenched neutral bias.”