Australia Adds More Workers as Unemployment Hits 2 1/2-Year High
Australian employers hired almost three times the number of workers economists forecast for September, pushing up the local currency, even as the unemployment rate jumped to a 2 1/2-year high.
The number of people employed rose by 14,500, the biggest increase since May, after a revised 9,100 drop the prior month, the statistics bureau said in Sydney today. The jobless rate climbed to 5.4 percent, the highest since April 2010, from 5.1 percent as more workers sought employment. That 0.3 percentage point rise was the biggest since May 2009.
The local dollar gained for a fourth day as traders pared bets Reserve Bank of Australia Governor Glenn Stevens will reduce the benchmark interest rate by another quarter point next month after he lowered it to 3.25 percent last week. Australia’s economy expanded at an annual pace of about 4 percent in the first half, driven by resource investment, before commodity prices eased and companies including BHP Billiton Ltd. (BHP) delayed or scrapped projects.
“You’ve still got modest employment growth and the growth is being driven by full-time jobs, which is good,” said Kieran Davies, chief economist at Barclays Capital in Sydney who predicted a 17,500 gain and a higher jobless rate. Still, the RBA “would place the most weight on” the unemployment rate picking up, he said.
The number of full-time jobs advanced by 32,100 in September, and part-time employment fell by 17,700, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, gained to 65.2 percent in September from a five-year low of 65 percent a month earlier, it showed.
The Australian dollar bought $1.0246 at 12:37 p.m. in Sydney, compared with $1.0225 before the release. Traders are pricing in a 76 percent chance the RBA will lower the benchmark rate by a quarter percentage point to 3 percent at its Nov. 6 policy meeting, swaps data compiled by Bloomberg show.
Queensland recorded the biggest job losses, shedding 20,900 as the state’s unemployment rate climbed to 6.3 percent in September, the highest level in three years.
The state government said last month it will cut 14,000 public service jobs this fiscal year as it aims to return the budget to surplus. BHP, the world’s biggest mining company, and Xstrata Plc (XTA) last month announced almost 900 job cuts across their coal mines in Australia as they scale back production because of falling prices.
New South Wales and Victoria, the two most populous states, added a combined 22,400 positions, today’s report showed. Employers in the key mining state of Western Australia added 11,100 workers.
Resource investment to meet Chinese demand and foreign investment funds seeking a haven have spurred gains in the currency, which closed above parity with the U.S. dollar for all but 23 days this year.
Today’s Australian data contrast with a drop in Australian help-wanted notices for a sixth straight month in September as project delays and cancellations eased demand for labor in mining states.
The median estimate in a Bloomberg News survey of 23 economists was for a 5,000 increase in employment in September and for the jobless rate to rise to 5.3 percent.
Unemployment at 5.4 percent “is now more in line with the reality of a softer labor market,” said Alvin Pontoh, an Asia- Pacific strategist at TD Securities Inc. in Singapore. An encouraging part of the report was a bounce in hours worked, he said.
RBA Deputy Governor Philip Lowe said this week that the labor market has “coped reasonably well” with adjustments including a strong currency triggered by the resource boom, and needs to adapt further to sustain low unemployment.
“The labor market appears to have generally softened in recent months, with only modest growth in total employment,” Lowe said in an Oct. 9 speech in Hobart, Tasmania. “Various indicators also suggest a lower rate of job creation than was the case a while back.”
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