Australian unemployment steady at 5.7%

Australian unemployment steady at 5.7%

SYDNEY - Unemployment in Australia remained unchanged at 5.7 per cent in October despite the loss of nearly 28,000 full-time jobs as the mining investment boom unwinds.

Economists had been expecting a figure of 5.8 per cent, which would have matched the four-year high reached in August. The September number was revised upwards from 5.6 per cent.

While the rate was steady, a total of 27,900 full-time jobs were lost, largely offset by part-time employment increasing by 28,900, which analysts said pointed to weakness in the market.

"The weakness in the labour market is highlighted by a continuing switching in jobs from full-time to part-time as companies seek to contain costs," said AMP Capital chief economist Shame Oliver.

"To be sure the jobs data is not good, but it's important to note that employment is a lagging indicator of the economy and the softness we are seeing now reflects the weakness in the economy seen over the last year."

The participation rate - the proportion of the population who have a job or are actively seeking one, and which is often interpreted as evidence of jobseekers giving up on looking for work - was unchanged at 64.8 per cent, its lowest rate since October 2006.

Unemployment numbers are seen as a key indicator for the Reserve Bank as it considers monetary policy. Interest rates have been cut by 225 basis points since November 2011.

In holding interest rates at their record 2.50 per cent low on Tuesday, central bank governor Glenn Stevens noted that "the unemployment rate has edged higher".

"This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment," he said, with slowing growth in key export market China and plunging commodity prices hitting Australia's mining sector.

But Oliver said the jobs data would not be enough to push the bank to cut rates again, with leading rising indicators - such as house and share prices, as well as business and consumer confidence - suggesting jobs growth should improve by mid-2014.

"As a result while the labour market remains very weak it's not weak enough to justify another rate cut from the RBA," he said.

"Our view remains that the RBA will keep the cash rate at 2.5 per cent out to September/October next year when rates will start to go up."

 

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