Australia jobless rate hits highest in more than a decade
Australian employment fell unexpectedly in January, driving the jobless rate to its highest in more than a decade and sinking the local dollar on speculation interest rates might yet have to be eased again in coming months. Today data from the Australian Bureau of Statistics showed unemployment rose to 6.0 percent in January, the highest level since July 2003 and well above forecasts of 5.8 percent. A net 3,700 jobs were lost in January, a huge disappointment as it followed a sharp 23,000 drop in December and meant no new jobs had been created at all in the past 12 months. The poor report puts the Reserve Bank of Australia (RBA) in a tough spot as only last week it shut the door on more easing, citing signs past cuts were boosting activity along with an unwelcome pick-up in inflation. The central bank has repeatedly said that it expected unemployment to rise gradually this year, so the numbers would not be a total shock. Yet were the jobless rate to move much above 6 percent, pressure would surely grow for a further cut in the 2.5 percent cash rate. “A rise in unemployment was an accident waiting to happen,” said Rob Henderson, chief markets economist at NAB. “I don’t think this will be a surprise to the RBA, but it is consistent with the idea that the economy outside of mining is pretty weak and a reason to think the RBA will stay on hold for several months ahead. We have a cut in for November.” The report will add to the media gloom that followed Toyota’s 7203.T decision this week to join Ford F.N and the Holden unit of General Motors GM.N in ceasing manufacturing in Australia by 2017. Government figures show that car makers have not made a profit since 2003, instead running up combined losses of A$4.4 billion.
The Aussie falls sharply after an unexpectedly weak employment report
The Australian dollar fell sharply today after an unexpectedly weak employment report revived speculation that a rate cut may yet be put back on the table. The euro meanwhile continued to nurse losses after suffering a setback on dovish comments from a top European Central Bank official. The Australian dollar fell 1.1 percent to $0.8928, pulling back from a one-month peak of $0.9068 reached on Wednesday. It shed 1.2 percent to 91.34 yen. The Aussie also pared gains on the euro, which bounced back to A$1.5205 from a two-month trough of A$1.4977 plumbed overnight. The euro struggled to gain traction on Thursday. The common currency suffered a setback the previous day on dovish comments from European Central Bank Executive Board member Benoit Coeure who said the idea of cutting into negative territory the ECB’s overnight deposit rate was “a very possible option”, The euro rose 0.3 percent to $1.3631, but remained below a two-week high near $1.3683 that had been set on Tuesday.