AUSTRALIA’s unemployment rate rose in April to the highest in eight months while full-time jobs fell, ABS data showed on Thursday, cementing views the central bank may be forced to lower rates soon to stimulate the economy.
The Australian dollar skidded 0.4 per cent to 68.91 US cents, the weakest since early January when a currency “flash crash” briefly sent the Aussie to 67.43 US cents.
Financial markets are implying an almost 60 per cent chance the Reserve Bank of Australia will ease policy next month.
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The RBA is closely watching the employment report for clues on monetary policy, as it is counting on labour market strength for a long-awaited pick up in wage growth and inflation amid a continuing slide in property prices.
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.
Jobs are being created at a brisk annual pace of 2.6 per cent, much faster than the 1.6 per cent rise in population but that is still not enough to meet with surging labour supply.
The unemployment rate rose for a second straight month to 5.2 per cent, when analysts had expected 5.1 per cent, as the participation rate climbed to 65.8 per cent indicating more people went looking for work.
More worryingly, forward-looking indicators of labour 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 about two 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 per cent.
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