Australia’s jobs market is still weakening, official figures show, adding to the case for an interest rate cut next month, economists say.
Data from the Australian Bureau of Statistics (ABS) on Thursday showed the unemployment had stayed steady in December, at 5.2 per cent.
November’s unemployment rate was revised down to 5.2 per cent.
HSBC chief economist Paul Bloxham said the data made a cash rate cut by the Reserve Bank of Australia (RBA) more likely.
“The data shows that unemployment has been on a slow grind for some time now,” Mr Bloxham said.
“I think this is still consistent with the RBA cutting interest rates next month, which is what we expect to happen.”
Total employment fell 29,300 to 11,421,300 in December, according to the ABS figures.
The forecast was for total employment to have risen by 5,000 in December with the unemployment rate at 5.3 per cent, according to the median of 13 economists surveyed by AAP.
Full-time employment rose by 24,500 to 8.051 million in December while part-time employment was down 53,700 to 3.37 million, the ABS reported.
The December participation rate was 65.2 per cent, compared with an unrevised 65.5 per cent in November. It was forecast to be 65.5 per cent.
“With the participation rate falling and employment also falling, it does look as though the labour market is still softening,” Mr Bloxham said.
The Australian dollar lost about one third of a US cent after the data’s release.
CMC markets foreign exchange dealer Tim Waterer said the headline reading of 29,000 jobs being shed prompted the sell-off.
“The breakdown showed there as a decent rise in full-time jobs,” Mr Waterer said.
“24,000 full-time jobs were created and the reason for the headline numbers was part-time jobs lost.”
ICAP senior economist Adam Carr said the data showed that employers were behaving cautiously in anticipation of a possible global downturn.
He said the unemployment figures did not suggest large-scale job losses were on the horizon, noting that the number of aggregate hours worked actually rose in December.
Mr Carr said the data would not increase the likelihood of a cut to interest rates in February.
“If they do cut, it will be in response to events in Europe and, maybe, the cost of funding pressure,” he said.
RBC capital markets fixed income strategist Michael Turner said the futures market rallied off the back of the headline figures.
He said the ABS data didn’t provide any clues as to whether or not the RBA would consider a further rate cut.
“It doesn’t create an open and shut case.
“The numbers aren’t great but the RBA’s generally been more focused on what’s being going on off-shore.”
Meanwhile, National Australia Bank chief economist Rob Henderson cautioned against reading too much into the data.
“You have to look at the trend in the numbers to make sense of them,” Mr Henderson said.
“When you do that, you find that whilst employment fell quite a bit in the latest month, actually, over the past six months, employment has been relatively stable.”