Finance Finance News Unemployment steady in May

Unemployment steady in May

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The Australian unemployment rate has remained steady at 5.8 per cent, despite predictions it would rise in the May

An AAP survey of 13 economists showed expectations that the jobless rate would rise as the non-mining sector fails to pick up the slack from the wind down in mining investment.

The total number of people with jobs fell 4,800 to 11.565 million in May, according to seasonally adjusted figures from the Australian Bureau of Statistics on Thursday.

Full-time employment rose 22,200 to 8.068 million in May and part-time employment was down 27,000 to 3.496 million.

While the jobless rate remained the same, the participation rate, those that have a job, are looking for work or are ready to start work – fell from 64.7 per cent, to 64.4 per cent.

Earlier, Treasurer Joe Hockey told ABC radio he was hoping for some good news on the unemployment front given that he had inherited a prediction that it would rise to 6.25 per cent.

“So far, it is remaining below six per cent and that is very encouraging,” he said.

The national accounts released last week showed the economy growing at its fastest annual rate in around two years.

The steady jobless rate came despite a rise in the country’s biggest state, NSW, increasing to 5.7 per cent from 5.4 per cent.

It also jumped to 6.8 per cent from 6.2 per cent in South Australia and to five per cent from 4.9 per cent in Western Australia.

However, in Victoria it fell to 6.2 per cent from 6.4 per cent, in Queensland it eased to 6.2 per cent from 6.3 per cent and in Tasmania it declined to 7.5 per cent from 7.6 per cent.

It also fell to 3.3 per cent from 3.5 per cent in the Northern Territory while it was unchanged at 3.3 per cent in the ACT.

Before the result, JP Morgan chief economist Stephen Walters said the problem was that while jobs were being shed following the end of the mining investment boom, businesses outside the resources sector remained too cautious to pick up the slack and hire people.

There’s also 16,500 jobs being cut from the public sector, as revealed in the federal government’s May budget.

“The mining investment boom was very labour intensive but the export phase of the boom is much less intensive,” Mr Walters said.

“So there’s a lot of jobs, probably 40,000 or 50,000 jobs, being spun out of the mining investment boom and they need to be taken up somewhere else.

“But it doesn’t seem like there’s a lot of appetite out there for hiring, particularly in retail, manufacturing and finance.”

Businesses are worried about consumer confidence, which recently took a hit from the tough spending cuts outlined in the May budget.

Consumer caution, along with the high Australian dollar and an increase to the minimum wage last week, are all disincentives for firms to hire people, Mr Walters said.

AMP Capital chief economist Shane Oliver had predicted jobs growth would dip after a strong start to the year but bounce back later in 2014.

“The main thing business needs to see is stronger demand, which has been given a boost by low interest rates and the decline in the Aussie dollar from 2011 levels,” he said.

“At some point, confidence will bounce back after the hit from the budget, which was a short-term risk to the economy and the unemployment rate.

– with AAP
“Basically what businesses want to see is increased demand and I think as the year proceeds, we will start to see that.”

– with AAP