Australia’s unemployment rate held steady at 5.8 percent last month, but the economy shed 22,600 jobs, data showed yesterday, sending the Australian dollar tumbling to a three-year low.
While the headline rate remained the same the Australian Bureau of Statistics (ABS) said seasonally adjusted unemployment increased, with the loss of 31,600 full-time jobs and the creation of just 9,000 part-time positions.
The rate was in line with forecasts but the “Aussie” dollar sank to US$0.8805 — its lowest since August 2010 — from US$0.8903 on Wednesday.
The government last month warned that the country faces 10 years in the red as resources investment declines sharply and the non-mining economy struggles to fire.
The Reserve Bank of Australia has slashed interest rates by 225 basis points over the past few years in a bid to stimulate economic activity, with rates currently at a record low 2.5 percent.
Central bank Governor Glenn Stevens is keeping an open mind on further cuts, with unemployment one of his key concerns.
The stubbornly high Australian dollar has also weighed on his mind, with Stevens telling lawmakers late last year that an exchange rate above US$0.90 was not sustainable in the long-term and US$0.85 was probably closer to its true value.
The Aussie traded at or above greenback parity for several years, hitting a high of US$1.1081 in July 2011, and its drop yesterday will be welcome news for the Reserve Bank.
Its prolonged bullish run weighed on trade-exposed sectors of the economy, particularly manufacturing, forcing a number of firms including carmakers Holden and Ford to close their doors at the cost of thousands of jobs.
AMP Capital chief economist Shane Oliver described the monthly print as “disappointing” and said the true jobless rate was being masked by Australia’s ageing population.
Without its growing levels of retirement, Oliver said Australia’s unemployment rate would be 7.1 percent “highlighting just how soft the underlying jobs market is.”
“Australian employment only rose by 54,600 through 2013, compared to average annual growth of 170,000 in the previous five years. So quite clearly the jobs market is very soft,” he said.
Annette Beacher from TD Securities said all new jobs created in the past 12 months had been part-time, with the economy shedding 68,000 full-time jobs.
However, she said the data was unlikely to see the Reserve Bank of Australia cut rates next month.
The government expects unemployment to peak at 6 percent in the year to June 30, but has forecast the jobless rate to hit 6.25 percent in each of the next three years.