Jobless rate jumps in August

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Jobless rate jumps in August

By Chris Zappone

The unemployment rate rose in August to 5.3 per cent, up from 5.1 per cent a month earlier, pushing the jobless rate to a 10-month high, according to new figures released today.

The economy shed 12,600 full-time jobs last month, adding to the upwardly revised loss of 26,400 full-time jobs in July. Employers added 2900 part-time jobs last month, less than the revised 22,300 such positions added in July, said the Australian Bureau of Statistics data.

All up the economy lost 9700 jobs after economists had earlier predicted it would add 10,000 and the jobless rate would hold steady at 5.1 per cent.

The Australian dollar lost half a US cent to $US1.0583 on the news as investors raised their bets the Reserve Bank will cut interest rates next month.

The participation rate - the share of the population available to work - remained steady at 65.6 per cent, while total employment stood at 11.43 million.

'A surprise'

For Macquarie senior economist Brian Redican, the rise in the jobless rate "certainly was a surprise" and is occurring more quickly than anticipated.

"It was much weaker, losing the full time jobs, and quite a substantial rise in the unemployment rate again after a similar outcome in the previous month," he said.

Mr Redican said the number reflected staffing decisions made before the financial market volatility erupted early in August.

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"It definitely doesn’t appear to be working to the RBA's script," he said, noting that today’s job data may prompt the RBA to reconsider its interest rate setting.

"With the unemployment rate rising, it suggest growth is below trend," he said.

Mining state weakness

The jobless rate spiked to 6.2 per cent in Queensland in August from 5.7 per cent in July, seasonally adjusted. In Western Australia, it jumped to 4.4 per cent in August from 4 per cent in July.

In New South Wales, joblessness ticked up to 5.4 per cent from 5.3 per cent in that time, while in Victoria it held flat at 5.1 per cent over the two months, the ABS said.

In Tasmania, unemployment rose to 5.2 per cent from 5.1 per cent, while in South Australia, the jobless rate eased lower to 5.1 per cent in August from 5.2 per cent in July.

Job cuts

The jump in unemployment follows job cuts at some of Australia's best-known companies.

The strong Aussie dollar, which has hurt exporters, pushed steelmakers BlueScope and OneSteel to announce in August that 1400 workers would lose their jobs. Qantas said it would cut 1000 jobs in a restructure aimed at expanding its geographical reach, while fruit canner SPC Ardmona said that 150 jobs would go because of higher local costs linked to the strong dollar.

Despite the signs of stress in the jobs market, Australia’s overall economy remains solid. Australia posted stronger than expected growth of 1.2 per cent in the second quarter yesterday, rebounding from a 0.9 per cent contraction caused by flooding on the eastern seaboard at the beginning of the year.

Global volatility

JP Morgan economist Helen Kevans said the volatility seen in financial markets appears to have weighed on corporate confidence.

"So with confidence falling back, it’s not surpising firms have wound back their hiring intentions and we’re likely to see more of that over the next few months," she said.

The ABS report also showed aggregate hours worked by employed people in Australia rose by 0.3 per cent in August, seasonally adjusted, following a rise of 0.2 per cent in July.

Aggregate hours worked in August 2011 were 2.2 per cent higher than in August 2010, compared with a rise of 4.6 per cent between August 2009 and August 2010.

Tim Waterer, senior FX dealer at online trading house CMC Markets, said the jobs numbers were "dismal" and offset the strong GDP result from yesterday "in terms of Australian dollar price activity".

"There is still not a crystal clear trend on which way the economy is heading."

On Tuesday, the RBA left rates on hold for a ninth meeting at 4.75 per cent as it weighed the impact of the mining boom on the domestic economy against the wobbles in the global economy in recent months.

czappone@theage.com.au

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