Australia jobless rate jumps to eight-month highs, Australian dollar stumbles
Written by OANN on May 16, 2019
FILE PHOTO: Commuters arrive to the Central Business District at the morning rush hour in Sydney June 28, 2013. REUTERS/Daniel Munoz/File Photo
May 16, 2019
By Swati Pandey
SYDNEY (Reuters) – Australia’s unemployment rate rose again in April to the highest in eight months while full-time jobs fell, official data showed on Thursday, cementing views its central bank may be forced to lower rates soon to stimulate the economy.
The local dollar skidded 0.4 percent to $0.6891, the weakest since early January when a currency ‘flash crash’ briefly sent the Aussie to $0.6743. Financial markets see a near 60% chance the Reserve Bank of Australia (RBA) will ease policy next month.
Thursday’s data will prove a setback for Australia’s governing Liberal-National coalition, which is heading into this weekend’s general election claiming to be a sound manager of the economy. Opinion polls show the opposition Labor Party is the favorite to win.
The RBA is closely watching the employment report for clues on monetary policy, as it is counting on labor market strength for a long-awaited pick up in wage growth and inflation in the face of a property market downturn.
Thursday’s figures showed 28,400 new jobs were created in April, surging past expectations for a rise of 14,000. But in an unwelcome sign, all of the increase was led by part-time work, with full-time declining 6,300.
Australia is creating jobs at a brisk annual pace of 2.6 percent, much faster than the 1.6 percent rise in population but that is still not enough to meet with surging labor supply.
The unemployment rate rose for a second straight month to 5.2 percent, when analysts had expected 5.1 percent, as the participation rate climbed to 65.8 percent indicating more people went looking for work.
More worryingly, forward-looking indicators of labor demand are now pointing to emerging weakness.
The National Australia Bank monthly employment index slipped last month, dragging down the Composite Employment Index to 51.4, the lowest reading since September 2016, from 53.4 in March.
A job index by Westpac has also turned down, suggesting that employment growth should slow to around 2 percent in the July-September period.
With the jobless rate inching up, lukewarm consumer prices and sputtering economic growth, the RBA will likely cut rates from a record low 1.50 percent.
(Reporting by Swati Pandey; Editing by Kim Coghill)