Unemployment surges to 12-year high of 6.4 per cent; 12,200 jobs shed
Unemployment has surged to 6.4 per cent, its highest level since August 2002, with 12,200 jobs estimated to have been lost in January.
The Bureau of Statistics estimates that the jobless rate jumped from 6.1 per cent in December to 6.4 per cent in January.
The main culprit was a 28,100-strong decline in full-time jobs, while there were estimated to be 15,900 more part-time workers than the previous month.
One positive in the report was that the proportion of the population in work or looking for it - the so-called participation rate - remained steady at 64.8 per cent.
Another was a 0.5 per cent increase in hours worked in January, despite the rise in unemployment and part-time work.
The more stable trend estimates have unemployment steady at 6.3 per cent and participation at 64.7 per cent.
Economists had typically expected the jobless rate to come in at only slightly higher at 6.2 per cent, although the majority had anticipated some degree of job losses rather than gains.
However, the very steep rise in the headline unemployment rate caused an equally sharp decline in the Australian dollar, which dropped from 77.3 US cents just before the release at 11:30am (AEDT) to 76.6 by 11:47am.
RBC Capital Markets senior economist Su-Lin Ong told Reuters that there was an element of "payback" from December jobs data that were much stronger than expected.
"It is a soft labour market and fits more broadly with the sub-par pace of growth, the weakening in domestic demand and what is a probably challenged outlook for the economy," she said.
"We see a fairly sticky jobless rate in the 6.25-6.5 per cent range."
She is forecasting that the Reserve Bank will cut interest rates again in May, but other economists say the next move is likely to be next month.
"We think it's a clear sign that the RBA will change the cash rate to 2 per cent in March," the Commonwealth Bank's Diana Mousina told Reuters.
"Their forecast has been for unemployment to peak at 6.5 per cent in mid-2016 we think there's a chance that now the unemployment peak will be a little bit higher."
SA, NSW see unemployment soar
South Australia and New South Wales led the rise in joblessness.
As car-related manufacturing winds down in Adelaide, South Australia has posted the biggest rise in unemployment and the highest rate of any state or territory.
The jobless rate jumped from 6.6 per cent in December to 7.3 per cent in January, although this was entirely due to an enormous jump in the state's participation rate.
The rise in New South Wales unemployment was, in some ways, worse, driven by a 14,500-strong loss of jobs, including the estimated loss of more than 30,000 full-time positions.
The participation rate in New South Wales actually eased, despite the state recently topping rankings of the nation's strongest economies.
"The declines in employment came from the biggest three states of New South Wales, Victoria, and Queensland - with each falling by 14,500, 6,300 and 7,100 jobs respectively," observed BIS Shrapnel's associate director of economics Richard Robinson in a note.
"The smaller states, however, pushed back with most posting small increases in employment."
