Australia’s unemployment rate unexpectedly fell last month, despite a plunge in full-time jobs, underscoring the mixed picture of the country’s labor market.
Jobless rate fell to 5.7 percent from 5.8 percent; economists had forecast 5.8 percent.
Employment rose 13,500 from December last year against a forecast of 10,000 gain. Full-time jobs slumped by 44,800; part-time employment rose 58,300.
Participation rate fell to 64.6 percent from 64.7 percent; economists had predicted 64.7 percent.
Australia’s labor market is sending mixed signals following lackluster hiring last year, when full-time jobs virtually stagnated as gains were primarily part-time.
The unemployment rate held below 6 percent partly due to discouraged job-seekers giving up the hunt, underscoring spare capacity in the labor market.
The Reserve Bank of Australia (RBA) last week cited forward indicators suggesting an improved hiring outlook while predicting the jobless rate was unlikely to fall far because of a high level of underemployment.
Australia’s economy is divided: On the east coast property prices are booming, spurring housing construction and attracting people from other states, while local governments are pouring cash into infrastructure. In the west and north, where a mining investment boom is unwinding, property prices are falling, businesses are going bust and people are leaving.
Internal migration is the main factor containing unemployment in Western Australia and Queensland and stopping it falling too far in Victoria and New South Wales.
“January’s labor market figures highlight that jobs growth has sustained its recent momentum,” Capital Economics Ltd chief Australia and New Zealand economist Paul Dales said. However, “the now-familiar problem of the new jobs being mostly part-time ones rather than full-time ones reared its ugly head again.”
“Slack remains in the labor market and leading indicators suggest this will continue to be the case for the foreseeable future,” Royal Bank of Canada fixed income strategist Michael Turner said. “This was the assessment made by the RBA last week, meaning we see few policy implications from today’s data.”
“The labor market recovery in Australia remains tepid,” JPMorgan Chase & Co’s Ben Jarman said. “It is hard to see how income growth and consumption will improve in the near term, and of course how slack will be eroded” to bring core inflation back toward target.
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