Australia Employers Unexpectedly Cut Payrolls By 8,800 In August

Australia Employers Unexpectedly Cut Payrolls By 8,800 In August

By Michael Heath - Sep 6, 2012 10:44 AM GMT+0900

http://www.bloomberg.com/news/2012-09-06/australia-employers-unexpectedly-cut-payrolls-by-8-800-in-august.html 

Australian employers unexpectedly cut payrolls in August for the second month in the past three, as evidence mounts that China’s slowdown is discouraging hiring.

The number of people employed fell by 8,800, the statistics bureau said in Sydney today. That compares with the median estimate for a 5,000 increase in employment in a Bloomberg News survey of 23 economists. The jobless rate declined to 5.1 percent from 5.2 percent as the participation rate dropped to the lowest level in more than five years, a sign that some job seekers exited the labor force.

Enlarge image 

The number of full-time jobs advanced by 600 in August, and part-time employment fell by 9,300, today’s report showed. Photographer: Ian Waldie/Bloomberg

The data support traders’ bets that Reserve Bank of Australia Governor Glenn Stevens will resume cutting interest rates as early as next month from the current 3.5 percent, the highest benchmark among major developed nations. While the world’s 13th-largest economy grew about 4 percent in the first half, a strengthening currency has triggered job reductions at companies including Toyota Motor Corp. (7203) and falling commodity prices prompted miners to scale back projects.

“Leading indicators have been pretty soft for the past few months and we just don’t think the demand for labor is as strong” as recent employment data indicate, Michael Turner, an economist at RBC Capital Markets Ltd. in Sydney who predicted a 10,000 drop, said before the report. “Business confidence remains pretty low.”

The number of full-time jobs advanced by 600 in August, and part-time employment fell by 9,300, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, dropped to 65 percent in August, the lowest level since March 2007, from 65.2 percent a month earlier, it showed.

Dollar’s Rise

The Australian dollar snapped three days of declines, buying $1.0218 at 11:39 a.m. in Sydney compared with $1.0180 before the data were released. Traders are pricing in a 58 percent chance the RBA will lower the benchmark rate by a quarter percentage point to 3.25 percent at its Oct. 2 policy meeting, swaps data compiled by Bloomberg show.

Mounting signs of a slowdown in China’s economy have spurred a 3.6 percent drop in the Aussie over the past month against its U.S. counterpart, making it the worst performer among major currencies tracked by Bloomberg.

Resource investment to meet Chinese demand and foreign investment funds seeking a haven have spurred gains in the currency, which closed above parity with the U.S. dollar for all but 23 days this year. The Aussie has averaged $1.0245 in the past two years, compared with 72 U.S. cents in the prior decade.

Help-Wanted Ads

Today’s Australian data follow a drop in Australian help- wanted notices for a fifth straight month in August as slumping business confidence delays hiring plans in mining states.

Toyota and General Motors Co. (GM) have fired workers in Australia this year, citing the strength of a currency fueled by the mining bonanza, while banks cut their payrolls as credit growth weakened.

BHP Billiton Ltd. (BHP), the world’s biggest miner, last month decided to delay approval of an estimated $33 billion expansion of the Olympic Dam copper, uranium and gold mine. Fortescue Metals Group Ltd. (FMG), Australia’s biggest iron ore producer after Rio Tinto Group and BHP, said this week it’s cutting its full- year capital spending forecast by 26 percent to $4.6 billion.

Chinese Premier Wen Jiabao in March reduced the government’s growth target for China to 7.5 percent for this year, the lowest since 2004, as policy makers there seek to reduce the role of large-scale fixed-asset investment in favor of greater consumer demand. China also has applied limited stimulus relative to 2008-09, as officials rein in property market speculation.