(Bloomberg) -- Australia’s unemployment rate fell to the lowest in almost three years in August as fewer people sought work, while the economy unexpectedly shed jobs.
- Employment dropped 3,900 from July; economists forecast 15,000 gain
- Jobless rate declined to 5.6% from 5.7%; economists forecast 5.7%
- Full-time jobs rose by 11,500; part-time employment fell by 15,400
- Participation rate, a measure of labor force as a share of population, declined to 64.7% from 64.9%; economists predicted 64.9%
The drop in unemployment is a gift for a government struggling to assert its authority in a parliament where it holds a razor-thin majority; yet the rise in people leaving the labor force suggests a level of discouragement that points to plenty of slack. The central bank has eased policy twice since May as it tries to boost inflation and tame an elevated local dollar; the picture is further clouded by the hiring of 38,000 people for a population count.
The “fall in employment in August is probably even worse than it looks as employment last month was boosted by people being temporarily employed to conduct the census,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics Ltd. “Even so, the forward-looking business surveys are consistent with employment continuing to grow.”
Still, monthly hours worked decreased by 3.9 million in August and the underemployment rate climbed to 8.7 percent. The participation rate in Thursday’s data was the weakest since May last year, helping reduce unemployment to the lowest level since September 2013.
The local dollar edged lower as the market digested the data, trading at 74.60 U.S. cents at 12:25 p.m. in Sydney, from 74.76 cents before its release.
Australia’s economy has been showing resilience against a difficult global backdrop, with industries like construction, tourism and education helping soak up unemployed miners as a resource boom is three-quarters wound down. Still, a rebounding local dollar -- up about 9 percent since mid-January -- risks the competitiveness of currency-sensitive service industries and could mute a record-low 1.5 percent cash rate.
In its rate statement this month, when the RBA held after cutting in August, it said: “recent data suggest that overall growth is continuing, despite a very large decline in business investment, helped by growth in other areas of domestic demand and exports. Labor market indicators continue to be somewhat mixed, but suggest continued expansion in employment in the near term.”