Unemployment close to GFC highs: ABS
Unemployment has increased 0.1 percentage points to 5.8% in August leaving it just below its post GFC high of 5.9% which was reached in June 2009, according to the Australian Bureau of Statistics.
The number of people employed decreased by 10,800 to 11,637,100 in August, mainly driven by a decrease in male full-time employment and a decrease in female part-time employment.
Part-time employment is down 8,200 to 3,508,300 people and full-time employment is down 2,600 people to 8,128,800.
The number of people unemployed increased by 9,400 people to 714,100.
"If the participation rate were still at its June 2009 level of 65.5% the unemployment rate would now be 6.5%. The fall in the participation rate to now 65%, reflecting a combination of demographic forces as the population ages and more retire and workers leaving the job market after becoming disillusioned in the search for a job, has clearly had the effect of understating the true weakness in the jobs market over the last few years," AMP's Shane Oliver says.
"The underlying weakness in the jobs market is also highlighted by a further rise in the labour force underutilisation rate to 13.7%, from 13% in May. This takes account of the unemployed and those who are employed but would like to work more hours.
Australia’s jobs market is still much stronger than that in the US, but as can be seen the gap in the unemployment rate between the two countries is closing rapidly."
Oliver predicts there are further increases to come.
"Weak labour market leading indicators – such as falls in the ANZ job ads report and still weak hiring plans according to the NAB business survey – point to a further rise in unemployment over the next six to nine months," Oliver says.
"It should start to top out around the middle of next year though as growth picks up in response to low interest rates, the lower $A and the recent lift in consumer and business confidence. The labour market is usually a lagging economic indicator and right now it is reflecting the weakness in overall of economic growth from 3-6 months ago.
"While stronger housing related indicators and the recent boost to confidence if sustained suggest that we are either at or very close to the bottom for interest rates in Australia, the weak job report highlights that the risk for interest rates is still on the downside."
ANZ says the signs point to no interest rate increases until late 2014 or early 2015.
"While the recent bounce in business and consumer confidence is encouraging, business conditions remain very subdued and labour market conditions are soft," ANZ's Riki Polygenis says.
"Admittedly, a number of tailwinds for the economy appear to be growing, including the more supportive global backdrop, the lower AUD and the housing market recovery which often has positive spill-over effects into consumer spending.
"However with mining investment to remain a significant drag on the economy and the outlook for non-mining investment still weak, we view an extended period of low rates the most likely outcome beyond the next few months (with no rate rise before late 2014 or early 2015)."