Australia’s unemployment rate increased to 6.4 per cent in January,
its highest level in 12 years, according to official jobs figures.
The ABS said the total number of jobs in Australia fell by 12,200 to 11.67 million in the month, on a seasonally adjusted basis, deteriorating further than market expectations by a wide margin.
According to an AAP survey of 14 economists, the Australian economy was expected to add 7,500 jobs in the month, while the unemployment rate was forecast to rise to 6.2 per cent.
The January unemployment rate compared with 6.1 per cent in December, and is the highest jobless figure since August 2002, when it also hit 6.4 per cent.
The participation rate, which shows the proportion of the population that have a job, or are looking for work or are ready to start working, was steady at 64.8 per cent, unchanged from in December.
The economy added 37,400 jobs in December, 44,900 in November and 16,700 in October.
The Bureau of Statistics said the last time the unemployment rate rose by 0.3 percentage points or more was in September 2012, although on average an increase of this magnitude occurs once every 12 months.
The figures were not affected by recent changes in the ABS employment survey, although usual volatility could have contributed to the increase in the jobless rate, the ABS said.
JP Morgan economist Tom Kennedy said it was a “shocking report all round”.
“There was not a lot of good news in this report,” he said.
“It really does suggest that the Australian labour market is still softening and that’s a trend we think will continue over the next few months, pushing the unemployment rate towards 6.5 per cent and maybe a little bit higher.
Mr Kennedy said the sharp rise in the unemployment rate makes the chances of a Reserve Bank interest rate cut in March a closer call, after it reduced the rate to 2.25 per cent in February.
“At this stage the data has been quite mixed, we had some pretty strong housing numbers yesterday, but then we get this January jobless number, so it is a very fine balancing act,” he said.
“At this stage we think May is more likely than March, but March is going to be a live meeting in terms of market pricing and expectations.”
ANZ senior economist Riki Polygenis said the unemployment rate will stay elevated for an extended period and will rise above 6.5 per cent.
“While new labour demand is holding up, it is not enough at present to offset retrenchments in particular industries such as mining and manufacturing or to keep up with the flow of new workers,” he said.
“We expect a further rate cut in the first half of 2015, most likely at the next board meeting in March.”
National Australia Bank senior economist David de Garis said the disappointing figures pointed to another rate cut in coming months.
He said employment growth is not keeping up with population growth.
The economy was creating about 15,000 jobs per month, for an annual rate of 1.5 per cent, but the working age population was growing at an annual rate of 1.75 per cent, leading to an inevitable rise in unemployment, he said.
“After two strong employment growth numbers, we’ve had some statistical payback,” Mr de Garis said.
“If you’ve got growth in the working age population of 1.75 per cent and you’re only creating jobs at 1.5 per cent, then you’re going to have some people who won’t be lucky enough to find a job.
“It’s consistent with another easing in monetary policy over the next few months.”
This news story is reprinted from www.businessspectator.com.au
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The ABS said the total number of jobs in Australia fell by 12,200 to 11.67 million in the month, on a seasonally adjusted basis, deteriorating further than market expectations by a wide margin.
According to an AAP survey of 14 economists, the Australian economy was expected to add 7,500 jobs in the month, while the unemployment rate was forecast to rise to 6.2 per cent.
The January unemployment rate compared with 6.1 per cent in December, and is the highest jobless figure since August 2002, when it also hit 6.4 per cent.
The participation rate, which shows the proportion of the population that have a job, or are looking for work or are ready to start working, was steady at 64.8 per cent, unchanged from in December.
The economy added 37,400 jobs in December, 44,900 in November and 16,700 in October.
The Bureau of Statistics said the last time the unemployment rate rose by 0.3 percentage points or more was in September 2012, although on average an increase of this magnitude occurs once every 12 months.
The figures were not affected by recent changes in the ABS employment survey, although usual volatility could have contributed to the increase in the jobless rate, the ABS said.
JP Morgan economist Tom Kennedy said it was a “shocking report all round”.
“There was not a lot of good news in this report,” he said.
“It really does suggest that the Australian labour market is still softening and that’s a trend we think will continue over the next few months, pushing the unemployment rate towards 6.5 per cent and maybe a little bit higher.
Mr Kennedy said the sharp rise in the unemployment rate makes the chances of a Reserve Bank interest rate cut in March a closer call, after it reduced the rate to 2.25 per cent in February.
“At this stage the data has been quite mixed, we had some pretty strong housing numbers yesterday, but then we get this January jobless number, so it is a very fine balancing act,” he said.
“At this stage we think May is more likely than March, but March is going to be a live meeting in terms of market pricing and expectations.”
ANZ senior economist Riki Polygenis said the unemployment rate will stay elevated for an extended period and will rise above 6.5 per cent.
“While new labour demand is holding up, it is not enough at present to offset retrenchments in particular industries such as mining and manufacturing or to keep up with the flow of new workers,” he said.
“We expect a further rate cut in the first half of 2015, most likely at the next board meeting in March.”
National Australia Bank senior economist David de Garis said the disappointing figures pointed to another rate cut in coming months.
He said employment growth is not keeping up with population growth.
The economy was creating about 15,000 jobs per month, for an annual rate of 1.5 per cent, but the working age population was growing at an annual rate of 1.75 per cent, leading to an inevitable rise in unemployment, he said.
“After two strong employment growth numbers, we’ve had some statistical payback,” Mr de Garis said.
“If you’ve got growth in the working age population of 1.75 per cent and you’re only creating jobs at 1.5 per cent, then you’re going to have some people who won’t be lucky enough to find a job.
“It’s consistent with another easing in monetary policy over the next few months.”
This news story is reprinted from www.businessspectator.com.au
Read more details on tax accountants sydney
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