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01 October 2023

Australian unemployment worst in a decade


Australia's unemployment rate in January jumped to 6.0 percent -- its worst in a decade -- with the economy shedding 3,700 jobs amid a turbulent transition away from mining, data showed on Thursday.

The Australian Bureau of Statistics said the jobless rate increased from 5.8 percent in December, with some 7,100 full-time positions lost, which were only partially offset by 3,400 extra part-time roles.

The Australian dollar dived on the data, which was above analyst predictions. It was at 89.52 US cents from 90.11 cents immediately prior to the announcement.

It is the highest unemployment has been since the global financial crisis, when it peaked at 5.8 percent, and its worst since July 2003. It also matches the government's forecast jobless peak for the year to June 30.

Australia is undergoing a bumpy economic transition with its decade-long Asia-led mining investment boom reaching its peak, and the ailing manufacturing sector in dire straits with the announced exit this week of Toyota, its last remaining automaker.

The Reserve Bank of Australia forecast unemployment to continue edging higher in its quarterly monetary policy update last week as spending in the mining sector unwinds.

A further 1,300 jobs were lost Thursday with the collapse of engineering firm Forge Group, whose clients include Rio Tinto and BHP -- both of whom are tightening their belts as commodity prices soften due to a spike of new supply coming online and slowing demand from China.

Reflecting this, Australia's mining and manufacturing states fared worst, led by resources-rich Western Australia where there was a 0.5 percentage point increase in the jobless rate to 5.1 percent.

Opposition leader Bill Shorten warned of "more pain coming down the road", with announced job losses at major firms including Toyota, Holden and Qantas yet to factor into the figures.

Shorten said there had been "one job lost every three minutes" since the conservative Prime Minister Tony Abbott-led government came to power in September.

During the election campaign Abbott promised to create one million new jobs by axing corporate pollution and mining profits taxes and launching a major road-building drive.

On Thursday, he blamed Labor policies for the spiralling jobless rate.

"I am dismayed that unemployment went up last month but this can hardly come as a shock," Abbott told parliament.

"They made a bad situation worse with their taxes and regulation and that's why we're getting rid of them."

Treasurer Joe Hockey said the rise in unemployment was in line with the government's own forecasts of 6.0 percent this financial year and 6.25 percent for each of the following three years as Australia's workforce ages and younger workers delay entry.

"If we want to get the unemployment rate down, not only from 6.0 percent but from 6.25 percent which is the current forecast, we need to improve the growth rate of the economy," he said, warning it would involve "structural change".

Hockey said the economy had expanded at below-trend pace for five of the last six years. Growth in the year to December 31 was 2.3 percent, well below long-term averages of 3.25 percent.

The government has said that Australia will be in deficit for up to a decade, and warned citizens to "adjust their expectations of what government can sustainably provide" ahead of a May budget expected to include deep spending cuts and asset sales.