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Aust jobless rate hits 12-year high

Reported by AAP
Thursday, August 7, 2014
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Australia's jobless rate has hit a 12-year high, watering down any expectations of an interest rate hike in the foreseeable future.

The unemployment rate unexpectedly jumped to 6.4 per cent in July - its highest level since June 2002 - from six per cent a month earlier.

The total number of people with jobs also disappointed, falling by 300 against expectations that 12,000 jobs would be added to the economy.

The Australian Bureau of Statistics figures were significantly weaker than the market was looking for, JP Morgan economist Tom Kennedy said.

"Unemployment has got to 6.4 per cent a lot quicker than we had expected and a lot faster than the Reserve Bank had expected as well," Mr Kennedy said.

"The figures were very soft all round - there was virtually no employment growth, we've had hours fall, part-time employment fall and only very tepid full-time employment growth so all in all, a very, very soft report.

"This pours a little bit of cold water over those expecting an earlier rate hike."

St George senior economist Janu Chan said there were some positive aspects in the figures, including a solid gain in full-time jobs and a decline in part-time jobs, a shift which suggests businesses are more encouraged about the economy.

A lift in the participation rate - those that have a job, are looking for work or are ready to start work - from 64.7 per cent to 64.8 was partly to blame for the lift in unemployment but suggested that previously discouraged workers were restarting their job search, she said.

"A recent improvement in leading indicators is suggesting that firms might be becoming more willing to take on new hires," she said.

"Additionally, the recovery in the domestic economy, albeit uneven, suggests that the unemployment rate should be close to stabilising."

Commonwealth Bank senior economist Michael Workman said the surprise rise in the jobless rate was just a blip.

"It's out of line from the leading indicators for the jobs market, which are implying that more jobs are being advertised and that the private sector is keen to employ more people," he said.

The Australian dollar has fallen almost one US cent since the figures were released and if the fall continued, it could help boost employment in the coming months, Mr Workman said.

"Really it should be around 90 US cents or below," he said.

"One way to get the Aussie dollar lower is to have weak employment outcomes and this was definitely a weak number."

CommSec chief economist Craig James said the job market was still in decent shape - unemployment rose because more people were looking for work.

"It is important to keep in mind that jobs growth has been solid over the past few months, particularly when it comes to full-time jobs ... almost 110,000 full-time jobs have been created in the first seven months of 2014, marking the best start to a calendar year in six years," he said.

Economists have noted the figures could have been affected by rotation of the ABS' survey group and its classification of job seekers.

26/10/2014 20:28Sydney, Australia. 26 October,2014
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