Weak employment figures show times are tough for job seekers, and economists say things will likely get worse.
Australia’s unemployment rate was steady at 5.7 per cent in July, the Australian Bureau of Statistics said on Thursday.
But the participation rate – the proportion of the population that have a job, are looking for work or ready to start work – fell from 65.3 per cent to 65.1 per cent, while the total number of people with jobs also fell by 10,200.
JP Morgan chief economist Stephen Walters said the disappointing data showed people were becoming discouraged from looking for work.
“The fall in participation is another soft sign that people are finding it a bit discouraging out there looking for jobs and are leaving the labour force,” Mr Walters said.
“Unemployment is higher than it was a year ago, employment is a lot weaker and participation is falling away – it’s a pretty difficult labour market out there.”
Mr Walters said it was not clear how things would improve in the near future, with no indication of where new jobs could be created.
“The jobless rate is a handy barometer of progress on the economy’s adjustment towards non-mining sources of growth, and the message so far is that not all is going to plan,” Mr Walters said.
“The big labour intensive sectors like retailing and finance and construction and so on, they’re still complaining about lack of demand and rising costs.
“It’s not clear to me where the job growth will come from, so unemployment will probably keep going up.”
Mr Walters said the jobless rate would likely climb to six per cent by the end of the year and rise even higher in 2014, warranting further cash rate cuts by the Reserve Bank.
CommSec economist Savanth Sebastian said the unchanged jobless rate reflected a general sluggishness in the economy.
“The economy is rather static and the jobs market is a reflection of that,” he said.
“Businesses are treading water.
“Trading conditions are holding at the worst levels in four years and employers are not keen to take on additional staff.”
Mr Sebastian said the steady rate of 5.7 per cent was unsurprising as businesses waited on the election outcome.
“Businesses have been sitting on their hands and are not looking to invest until the election is out of the way,” he said.
Mr Sebastian said it was very likely the unemployment rate, currently at a four-year high, would rise over the next few months.
