- Employment fell 5,100 compared with expectation for 9,600 rise
- Unemployment steady at 6.2%; RBC sees rise to 6.5% in 2016
Australian employers unexpectedly cut jobs in September, signaling record-low interest rates are yet to put the economy on a sustainable footing and offset a slump in mining investment.
- Employment fell 5,100 from August compared with a median forecast of a 9,600 increase.
- The jobless rate held at 6.2 percent, matching the median forecast.
- Full-time jobs fell 13,900; part-time employment rose by 8,900
- The participation rate, a measure of the labor force as a proportion of the population, fell to 64.9 percent from 65 percent in August and compared with a median forecast of 65 percent
The central bank cut its benchmark rate to a record-low 2 percent in May but investment by non-mining firms has so far failed to pick up leaving housing construction as one of the few bright spots in the economy.
“If we’re going to get a move lower in the unemployment rate we need something better than what we’ve seen” in terms of jobs growth, said Michael Turner, a debt strategist at Royal Bank of Canada in Sydney. “Our view is that’s probably not going to happen and as we head into next year employment growth will slow down a touch and unemployment will grind its way up to 6.5 percent.”
The statistics agency has in the past cited challenges in compiling the report and following large swings in the monthly jobs numbers in 2014 it reviewed the agency’s data calculation method. Economists in August questioned the strength of a reported 38,500 jump in employment for July.
“This is a noisy survey at the best of times and these aren’t the best of times,” Turner said. “Everyone is treating this survey with a bit of skepticism.”
The Australian dollar initially fell before recovering to trade at 73.48 U.S. cents at 3:04 p.m. in Sydney, from 73.40 cents before the data was released.
The proportion of workers with part-time jobs continued to rise in September, reaching a record 31 percent, according to data calculated by Bloomberg, reflecting a global shift away from full-time employment.
Australia’s terms of trade, or export prices relative to import prices, dropped 3.4 percent in the second quarter and are down 30 percent from their 2011 peak, reflecting the country’s dependence on China, which is going through its own economic transition.
Oil and gas producer Santos Ltd. said this week it will cut 200 jobs at its Eastern Australian business as part of an ongoing drive to reduce costs amid low oil prices.
Traders are pricing in a 33 percent chance of another rate cut in November ahead of the data release with the odds rising to 46 percent for a reduction by December.