Unemployment jumps to 6 per cent for first time in a decade

Updated

Australia's unemployment rate has jumped to 6 per cent for the first time in more than a decade.

The Bureau of Statistics estimates that 3,700 jobs were lost in January, pushing the unemployment rate from 5.8 up to 6 per cent - the first time it has reached that level since July 2003.

That jobless rate of 6 per cent tops the figure reached during the height of the global financial crisis, when unemployment peaked at 5.9 per cent in June 2009.

All of the jobs lost were full-time, with an estimated 7,100 positions going, while 3,400 part-time jobs were added.

Despite the loss of full-time positions, the ABS estimate of aggregate monthly hours worked last month rose 1.3 per cent to 1.64 billion.

The participation rate, which measures the proportion of people in work or looking for it, remained steady at 64.5 per cent, but is down 0.8 percentage points over the past year.

On the more stable trend figures, unemployment edged higher from 5.8 to 5.9 per cent, while participation eased from 64.6 to 64.5 per cent in January.

Victoria struggling, WA worsening

Tasmania continues to have the nation's highest unemployment rate at 7.6 per cent, but it has been on the way down since a peak above 8 per cent earlier this year.

Victoria's unemployment rate of 6.4 per cent is the state's worst since January 2002.

However, the biggest monthly rise in the unemployment rate occurred in Western Australia, where the jobless rate jumped from 4.6 per cent last month to 5.1 per cent, seasonally adjusted.

State-by-state NSW: Unemployment steady at 5.8 per cent; participation up from 62.8 to 62.9 per cent.

Victoria: Unemployment up from 6.2 per cent to 6.4 per cent; participation up from 64.5 to 64.7 per cent.

Queensland: Unemployment up from 5.9 to 6.1 per cent; participation down from 65.5 to 65.2 per cent.

SA: Unemployment down from 6.8 to 6.6 per cent; participation down from 62 to 61.8 per cent.

WA: Unemployment up from 4.6 to 5.1 per cent; participation up from 68.2 to 68.3 per cent.

Tasmania: Unemployment steady at 7.6 per cent; participation steady at 59.7 per cent.

NT: Unemployment down from 4.3 to 4 per cent; participation down from 74.7 to 74.6 per cent.

ACT: Unemployment down from 3.9 to 3.8 per cent; participation steady at 71.3 per cent.

Source: ABS. All data seasonally adjusted, except Tasmania, NT and ACT which are trend, due to small sample size. Source: ABS. All data seasonally adjusted, except Tasmania, NT and ACT which are trend, due to small sample size.

Dollar dives

The Australian dollar plunged almost a cent on the result, from 90.3 US cents to 89.4 US cents shortly after the data was released at 11:30am (AEDT).

The local currency is down as traders again factor in the possibility that the Reserve Bank may have to cut interest rates again to combat rising unemployment.

National Australia Bank's chief markets economist Rob Henderson certainly thinks that is possible later this year, after two straight months of job losses to end 2013 and start 2014.

"It's telling us that employment tends to be fairly soft around the turn of the year and a rise in unemployment rate was an accident waiting to happen," he told Reuters.

"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 [rate] cut in November."

CommSec chief economist Craig James opts for a more optimistic view of the figures, citing the rise in hours worked over the past year.

"It could be the first sign that the jobless rate is close to topping out - with businesses increasing part time workers and working existing staff longer hours before eventually hiring more full time staff," he wrote in a note on the data.

"We would have been much more concerned if part-time jobs and hours worked were falling."

Topics: business-economics-and-finance, economic-trends, unemployment, australia, nt

First posted