Australia saw its biggest monthly drop in full-time jobs in five years in September, a report showed Thursday, sending down the local dollar. The 162,800 part-time positions added in the year so far is the biggest gain on record, according to data going back to 1978. The 112,100 full-time jobs cut in the same period was the worst result since 1991, when the economy was mired in its last recession.
The report showed:
- Full-time jobs slumped 53,000 in September, the biggest drop since April 2011; part-time employment advanced 43,200
- Participation rate dropped from 64.7% to 64.5%, the lowest level in almost two years; economists predicted 64.8%
- Employment fell by 9,800 from August, when it declined an upwardly revised 8,600; economists had forecast a 15,000 gain
- The jobless rate fell to 5.6% from a revised 5.7%; economists forecast 5.7%
The surprise weakness is a blow to policy makers who’ve made some progress in encouraging hiring via record-low interest rates and subdued wage growth. The central bank has eased policy twice this year amid falling resource investment and a local dollar that’s climbed 12 percent since mid-January. That appreciation hurts currency-sensitive service industries like tourism and education that are designed to help offset mining job losses.
“There’s a disproportionate percentage of jobs coming from part-time roles,” said Andrew Ticehurst, an interest-rate strategist at Nomura Holdings Inc. in Sydney. “Some of the full-time, part-time split reflects cyclical shifts in the sources of growth within the economy, but there’s a longer-term structural component here too with the casualization of the workforce.”
The local dollar fell to 76.93 U.S. cents at 1:28 p.m. in Sydney, from 77.32 cents before the data was released.
Job losses by state last month were led by the manufacturing hub of Victoria, which cut 11,700 positions, followed by the resource-rich states of Western Australia, which lost 7,600 and Queensland, with 4,100. Gains were led by New South Wales with 6,700 extra roles.
Accommodative monetary policy has assisted the economy’s adjustment from mining, including rate cuts in May and August that took the cash rate to 1.5 percent. That’s sent east-coast house prices surging and underpinned a residential construction boom -- designed to encourage the hiring of former miners -- that’s seen New South Wales become the center of growth, as Western Australia and Queensland absorb the shock of the mining investment drop.
Yet Daniel Blake, a Sydney-based strategist at Morgan Stanley, said in a report this week that housing investment has passed its peak, putting about 200,000 jobs at risk. He predicts the Reserve Bank of Australia will need to cut rates by another 50 basis points to 1 percent in the second half of 2017.
Heather Ridout, a central bank board member and former head of a national industry group, said in an interview Tuesday it was a “confusing time” in the labor market.
“The Australian economy is making a very difficult transition and it’s making it
pretty well,” she said. “In a time of uncertainty you often see more temporary employment before things translate into full-time work. So it’s a confusing time. But I think we’re very fortunate that unemployment has got a 5 in front of it.”
RBA chief Philip Lowe, in his maiden speech as governor this week, said that “while the Australian economy has performed better than many others over the past decade, we still have some spare capacity.” He said RBA staff estimate the jobless rate is about half a percentage point “or a bit more” above full employment.
The central bank has kept its benchmark unchanged at the past two meetings.
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