Unemployment at 13-year low Jim Parker 2003/09/11 Australia's unemployment rate has plunged to a 13-year low as a stunning recovery in full-time jobs further highlights the swift turnaround in the economy's fortunes. The seasonally adjusted rate of unemployment tumbled from 6.2 per cent in July to 5.8 per cent in August, a level not seen since early 1990, according to official data from the Australian Bureau of Statistics on Thursday. Even more impressive, the economy created 80,600 new jobs last month, twice the pace of consensus market expectations and with 63,500 of those positions full-time. Part-time employment rose by a more modest 17,100. The unexpectedly strong figures pointed to a sharp turnaround in the labour market after six months of weak employment. It triggered a steep sell-off in the bond market as investors brace for an imminent rise in official interest rates. The data also added to recent evidence that the economy is now past its weakest point. The national accounts last week showed growth slowed to a two-year low in the June quarter, but more timely indicators suggest activity has since rebounded. The consensus forecast from financial market economists polled by Reuters had been for a 40,000 rise in employment, with unemployment steady at 6.2 per cent.
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Having put a freeze on hiring earlier this year because of the uncertainty caused by the SARS virus and the build-up to the war in Iraq, many businesses have started putting on staff again in response to a pick-up in orders. The end of the drought has also been accompanied by a pick-up in employment in agriculture, although the proportion of the workforce employed in that sector of the economy has been falling steadily for decades. The reaction to the August labour force report from financial markets was swift. The Australian dollar jumped by about a quarter of a cent to US65.8¢, while bill and bond futures were sold down sharply. The December bill futures contract was priced at 94.94, implying a yield of 5.06 per cent. This means the market is fully priced for at least one increase in the official cash rate, now at 4.75 per cent, before Christmas.
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