Australia's Unemployment Rate Jumps to 5.3% in August
Number of Employed Went Down 9,700
The unemployment rate in Australia went up to 5.3 percent in August, the Australian Bureau of Statistics reported Thursday. The number of employed people declined 9,700 to 11.433 million in August.
It was the second straight month of job cuts after 4,100 workers lost their jobs in July. It is the highest rate of unemployment since October 2010.
The number of full-time employed workers declined 12,600 to 8.03 million, while those engaged in part-time work went up 2,900 to 3.4 million.
Economists' expectations were for a lower 5.1 per cent unemployment and an additional 11,000 jobs in August.
The release of the unemployment figure caused a drop in Australia's currency, stocks and bond yield. Investors were wagering that the Reserve Bank of Australia would cut interest rates because of the hike in unemployment. Their bet is that the RBA would reduce the benchmark interest rate by about 75 basis points in December.
In August, BlueScope Steel, Qantas Airways and WestPac Banking Corporation announced plans to cut jobs. With the release of the unemployment figure, RBA Governor Glenn Stevens indicated the Australian central bank would likely keep interest rates longer at its current 4.75 per cent amid the threat to the Australian economic of problems in the international financial markets.
The central bank held the key lending rate steady Tuesday because of volatility in the world financial markets.
"Once the unemployment rate starts going up to 5.5 per cent, which is now only a breath away, that does suggest that growth is too slow and it's going to put pressure to cut rates," Macquarie Group senior economist Brian Redican told the Herald Sun.
Helen Kevans, JPMorgan Chase economist in Sydney, told Bloomberg that Australians should expect worse employment reports in the coming months.
After the report came out, the Australian dollar traded at $1.0584 as 12:52 p.m. in Sydney from $1.064. Yields of two-year bonds dropped 1.3 basis points to 3.63 per cent and the S&P/ASX 200 index went down 0.3 percent to 4,169.80.
