RTRS: Australia’s Jobless Rate Rises to Highest in a Year (Update2)
By Jacob Greber
Dec. 11 (Bloomberg) -- Australia’s jobless rate climbed to the highest in a year as employers cut part-time workers in November, adding to signs the economy may follow the U.S., Japan and Europe into a recession.
The jobless rate rose to 4.4 percent from 4.3 percent in the previous month, the statistics bureau said in Sydney today. The number of people employed fell 15,600 in November.
Rio Tinto Group and Australia & New Zealand Banking Group Ltd. are among companies shedding employees amid a deepening global economic slowdown. The nation’s biggest decline in jobs since May increases pressure on Governor Glenn Stevens to add to the central bank’s most aggressive round of interest-rate reductions since the economy was last in a recession in 1991.
“The bleak outlook for employment means the Reserve Bank’s job is far from complete,” said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney. “We expect the bank to lower the cash rate another 50 basis points in early February and 25 basis points in March.”
Investors have a 100 percent expectation the Reserve Bank of Australia will cut interest rates by one percentage point at its next scheduled meeting on Feb. 3, according to a Credit Suisse index based on swaps trading.
The central bank has slashed its benchmark rate by three percentage points since September to a six-low of 4.25 percent.
The S&P/ASX 200 stock index fell 2.1 percent to 3,563.2 at 12:39 p.m. in Sydney, led by shares in retailers, banks and mining companies. Australia’s dollar traded at 65.67 U.S. cents from 65.53 cents before the report was released. The two-year government bond yield was unchanged at 2.95 percent.
Western Australia
Today’s figures matched the median estimates of 22 economists surveyed by Bloomberg News. The number of part-time jobs decreased 24,400 in November and full-time employment gained 8,800 from October.
The jobless rate jumped by the most in Western Australia, which generates a third of the nation’s exports with 10 percent of the population. The state’s unemployment surged to 3 percent from 2.3 percent. New South Wales’ rate fell to 5.2 percent.
Rio Tinto, the world’s third-largest mining company, said yesterday it will eliminate 14,000 jobs, reduce capital spending by more than half and sell “significant assets” as demand for metals sinks in the global recession.
Employers are also shedding staff amid concern the local economy is on the brink of a recession, after gross domestic product expanded 0.1 percent last quarter from the previous three months, the weakest pace in eight years.
Airlines, Banks
Qantas Airways Ltd., Ford Motor Co., Fairfax Media Ltd., and Telstra Corp. are among companies that have recently announced plans to fire workers.
The Finance Sector Union of Australia estimates that the worsening global credit crisis has seen local banks and brokerages cut 4,821 employees this year, union spokeswoman Leanne Shingles said yesterday.
ANZ Bank has shed 1,000 jobs, while Westpac Banking Corp. and its BT Investments unit fired 450 workers. The local divisions of Goldman Sachs Group Inc. has cut 10, Merrill Lynch & Co. 20, and UBS AG 50, the union said.
Financial services account for 7.8 percent of the A$1 trillion ($659 billion) economy, according to Investment and Financial Services Association estimates.
“We expect the pace of labor shedding to step up,” said Su-Lin Ong, a senior economist at RBC Capital Markets Ltd. in Sydney. “The outlook for jobs is going to temper the impact of rate cuts and the government’s stimulus package.”
Government Handouts
The government this week started distributing A$8.9 billion in handouts to pensioners and families and encouraged them to spend the cash to support the flagging economy.
Interest-rate cuts and extra government spending will provide “significant” support for the economy in 2009 amid a global slowdown, central bank Governor Stevens said on Dec. 9. “There is scope to do more with macroeconomic policy settings if needed,” he added.
The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.1 percent in November from a revised 65.2 percent, today’s figures showed.
The unemployment report was compiled by the statistics bureau using a sample of businesses that was reduced by 24 percent in July. The bureau, which reduced the survey because of budget cuts, has said the changes have increased the volatility of the figures.
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
