ACT jobless rate hits 11-year high
The ACT’s jobless rate has jumped to its highest level in more than 11 years, as 3000 more people were listed as unemployed in the territory in January.
Strong growth in the number of new part-time jobs helped to keep the national unemployment rate steady in January, offsetting a recent run of weak reports on the Australian economy.
But the capital’s unemployment rate now sits at 4.5 per cent in trend terms, after the December figures were revised up from 4.2 per cent to 4.4 per cent. The January 2013 figure is a jump of 0.9 points from the January 2012 figures.
The last time the ACT unemployment level hit 4.5 per cent was in October 2001.
The new data puts ACT behind the Northern Territory and Western Australia, who recorded the lowest two unemployment rates respectively.
ACT Treasurer Andrew Barr said the rise in the capital's jobless rate was expected on the back of spending cuts in the Australian Public Service.
“That’s not surprising given what was forecast in the Commonwealth budget. We anticipated, in fact, there would be no employment growth in the territory in this financial year. These figures actually show there has been some growth, which is encouraging," he said.
While the private sector appeared to be marginally increasing employment in the territory, Mr Barr said the Commonwealth's efficiency divided was hitting the public sector hard.
“That is, as we anticipated, having an impact on the labour market here in the ACT," he said.
“Our economy is delivering new jobs, but perhaps not quite as many as was the case before, and the reason for that is the Commonwealth, being half the labour market in the ACT, they’re contracting. Our population is still growing at nearly 2 per cent a year, and the rate of jobs growth is not keeping pace with that."
The national jobless rate stayed flat at 5.4 per cent for January, beating economists’ expectations of a slight rise to 5.5 per cent, according to the Australian Bureau of Statistics. The economy lost 9800 full-time jobs but added 20,200 part-time positions, taking the net gain to 10,400.
The participation rate - the percentage of people either in work or looking for work - fell from 65.1 per cent to 65.0 per cent, helping to keep a lid on the overall unemployment rate.
The Australian dollar initially rallied on the release of the data, touching an intraday high of $US1.0331, before losing all of the gain. It fell to $US1.0299 before recovering to $US1.031.
HSBC Australia chief economist Paul Bloxham said the figures showed the labour market was more resilient than many believed.
"This certainly suggests that the labour market might be a bit tighter than many commentators have been touting and have been concerned about," he said.
"We remain of the view that policy setting and global conditions are conducive for a pick up in local growth, so the steady jobs market is consistent with that view."
Analysts still suspect the jobless rate will continue to creep higher given sluggish domestic demand and the competitive pressures of a historically high currency.
State by state
Unemployment in New South Wales remained steady at 5.1 per cent. Victoria, however, experienced a big rise in joblessness, from 5.6 per cent to 6.1 per cent. Queensland fell from 6.1 per cent in December to 5.5 per cent in January.
Elsewhere, South Australia's jobless rate climbed from 5.8 per cent to 6.1 per cent, WA fell from 4.3 per cent to 4 per cent and Tasmania rose from 7.4 per cent to 7.8 per cent.
Mathew Johnson, interest rate strategist at UBS, described it as a "balanced report".
"I don't think it will change the RBA's [interest rate deliberations]," he said.
"It looks like unemployment is trending up. Given weakness in retail sales, I think the RBA will cut in March. There will be more this year, perhaps two or three cuts would stabilise the economy and bring it back around trend."
Macquarie's Brian Redican said the rise in unemployment was consistent with a rate cut, but the general sluggishness of the data hasn’t given the RBA any urgency to trim rates.
"In an environment where the economy is losing a major driver from mining investment and replacement drivers for growth are pretty thin on the ground, these data are consistent with the RBA continuing to trim rates."
On Tuesday, the Reserve Bank kept interest rates on hold at 3 per cent during its first board meeting of the year yesterday, citing an improving global economy and subdued inflation. But the Board kept the door open for further cuts if needed.
Yesterday, data showed weaker-than-expected sales in the critical December shopping period, with retail sales falling 0.2 per cent in December, the third-straight monthly drop.
Meanwhile today, the National Australia Bank’s quarterly business survey, which was also released today, found that business conditions were at their weakest since the June quarter of 2009, particularly in the construction, manufacturing and mining sectors.
Business conditions fell on the NAB index to minus 6 from 1 in the previous quarter.
‘‘Our survey implies fairly tepid growth in domestic demand and GDP in the final quarter of 2012. Forward indicators of near-term demand weakened notably to very subdued levels, further suggesting that activity will remain soft, in the near term at least,’’ NAB said.
with Glenda Kwek, BusinessDay, wires