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* Employment drops 3,400 in Jan, well under forecasts of
+15,000
* Jobless rate climbs to 6 pct, highest since 2003
* A fresh blow to confidence after news of automaking
closures
By Wayne Cole
SYDNEY, Feb 13 (Reuters) - Australian employment fell
unexpectedly in January, driving the jobless rate to its highest
in more than a decade and sinking the local dollar on
speculation interest rates might yet have to eased again in
coming months.
Thursday's data from the Australian Bureau of Statistics
showed unemployment rose to 6.0 percent in January, the highest
level since July 2003 and well above forecasts of 5.8 percent.
A net 3,700 jobs were lost in January, a huge disappointment
as it followed a sharp 23,000 drop in December and meant no new
jobs had been created at all in the past 12 months.
The poor report puts the Reserve Bank of Australia (RBA) in
a tough spot as only last week it shut the door on more easing,
citing signs past cuts were boosting activity along with an
unwelcome pick-up in inflation.
The central bank has repeatedly said that it expected
unemployment to rise gradually this year, so the numbers would
not be a total shock. Yet were the jobless rate to move much
above 6 percent, pressure would surely grow for a further cut in
the 2.5 percent cash rate.
"A rise in unemployment was an accident waiting to happen,"
said Rob Henderson, chief markets economist at NAB.
"I don't think this will be a surprise to the RBA, but it is
consistent with the idea that the economy outside of mining is
pretty weak and a reason to think the RBA will stay on hold for
several months ahead. We have a cut in for November."
Futures markets are only pricing in a slender chance of an
easing anytime soon , though investors still decided to
knock the local dollar down three quarters of a cent .
The report will add to the media gloom that followed
Toyota's decision this week to join Ford and the
Holden unit of General Motors in ceasing manufacturing in
Australia by 2017.
Government figures show that car makers have not made a
profit since 2003, instead running up combined losses of A$4.4
billion. Domestically produced cars comprise little more than a
tenth of the 1.1 million vehicles sold annually in Australia.
NOT THAT BIG
The closures will be a blow to an already sluggish labour
market given the ABS estimates around 45,000 people are employed
in vehicle and parts manufacturing, with Toyota, Holden and Ford
accounting for around 8,000 directly.
Alan Oster, chief economist at NAB, also noted the layoffs
will come as a number of major resource projects are set to be
completed with a resulting loss of construction jobs.
"The demise of the automotive construction industry can be
expected to represent an additional headwind for the Australian
labour market over the next twelve to eighteen months," he says.
Yet the scale of the blow should be kept in perspective.
Manufacturing as a whole accounts for only 7 percent of
gross domestic product (GDP), and cars a mere 0.4 percent. The
entire sector has just 8 percent of all jobs, behind
construction, retail, and health care.
Employment in scientific, professional and technical
services has expended so rapidly in recent years it is almost as
large as manufacturing.
Indeed, the business of selling and maintaining vehicles has
three times as many workers as car building, and they could
actually fare better should import tariffs be removed entirely
and imported cars become cheaper.
"Our analysis suggests that the impact on the national
labour market and on growth will be small," said Diana Mousina,
an economist at CBA. "The outcomes of industry restructuring
over the past decade indicate that the bulk of the workforce
find employment in other sectors."
(Editing by John Mair)
((Wayne.Cole@thomsonreuters.com)(612 9373 1813)(Reuters
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
Keywords: AUSTRALIA ECONOMY/