The unemployment rate rose by just 0.1% in November to 4.4%, new Bureau of Statistics labour data shows. The data took economists by surprise, as most were predicting a much larger rise.
The unemployment rate rose by just 0.1% in November to 4.4%, new Bureau of Statistics labour data shows. The data took economists by surprise, as most were predicting a much larger rise.
RBC Capital Markets senior economist Su-Lin Ong says the data confirmed the labour market was weakening. She argues a bigger fall may be just around the corner.
“It confirms the weakening in the labour market, but the deterioration is fairly modest at this juncture; I think the market is braced for worse than this,” she told Business Spectator.
“What’s worrying is the leading indicators portend to a much weaker labour market going forward than what today’s numbers would suggest.”
The participation rate, which reflects the number of people in work or looking for work, fell by 0.2% to 65.1%.
Employment fell by 15,600 to 10,750,000 overall, while those looking for full-time work increased by 5900 to 344,700. The number of people looking for part-time work increased by 2000 to 151,900.
Inflation heading down
With unemployment rising, it seems inflation is now off the table. New Westpac data shows consumer inflationary expectations fell in December to a median of just 2.5% from 3.3%, the lowest point since March 2005.
The trend has spiralled downwards since a June peak of 5.4%. Customers expecting inflation above the 2% to 3% target increased from 41.2% to 51.8%, the largest proportion since December 2003.
Unemployment expectations have fallen 0.7% after a 13.2% jump last month. The figures remain similar to those seen during the 1990-91 recession.
“These extremely pessimistic consumer labour market expectations continue to suggest downside risks for our labour market outlook, where we expect jobs growth to slow to 0.2% through 2009, lifting the unemployment rate towards 6%,” senior economist Anthony Thompson says.
Sharemarket higher
Meanwhile, the Australian sharemarket opened higher following gains on Wall Street, but has since fallen despite Rio Tinto shares leaping more than 7%.
The benchmark S&P/ASX200 index was down 72.7 points or 2% to 3568 at noon AEDT. The dollar remained at $US65 cents.
Telstra shares dropped 2.3% to $4.17, while Commonwealth Bank shares also fell 1.9% to $27.95, dropping further than yesterday’s five-year low of $28.50.
Rio Tinto’s fillip came after news the group will work on bringing down its debt levels, but remained up 5.2% to $39.36 at 11.30 AEDT.
The Dow Jones industrial average closed higher at 70.09 points, or 0.81% to 8761.42. Oil also rose 2% to $US43 a barrel following news Saudi Arabia has cut its supply.
Also in the US, the $US15 billion auto industry bailout package may come to a halt, as Republican party members move to stall the legislation in the Senate.
“I will use every procedural tool available to demand an amendment process on the floor of the Senate and to delay and block the measure as it presently stands,” Louisiana Senator David Vitter says. The bill has also been opposed publically by at least one Democrat.
The bill is designed to prevent General Motors, Chrysler and Ford from collapsing. GM shares fell 3% to $US4.56 following the public debate, while Ford fell 4.6% to $US3.08.
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