MNI DATA IMPACT: Australia Jobless Rate Edges Higher In August

By Lachlan Colquhoun

     SYDNEY (MNI) - Australia's unemployment rate rose to 5.3% in August, up

from 5.2% in July, underlining the Reserve Bank of Australia's unease over the

domestic labour market. The jobless rate had fallen to a decade low of 4.9% in

February.

     Here are other things of note in the data released by the Australian Bureau

of Statistics Thursday.

Unemployment higher, but more people employed

The August data continued the trend for unemployment to tick higher, even as

employment grows. Another a net 34,700 jobs were created in August, albeit

boosted by an increase in part-time employment. The unemployment rate was pushed

up in part due to record a high participation rate of 66.2%.

Implications for monetary policy 

The Reserve Bank of Australia cut official interest rates in June and July to a

record low 1%, citing overcapacity in the labour market as a major reason for

its decision. The RBA forecast unemployment to be steady at 5.2% this year,

before falling to 4.9% by June 2020. The Bank has indicated it believes full

employment is achieved with an unemployment rate of 4.5%. Today's result lends

some weight to a third interest rate cut as early as October.

Full time and part time 

In a reversal of last month's result, full time employment fell by 15,500 while

the economy added 50,200 part time jobs.

Underemployment still high 

The underemployment rate is now closely watched as an indicator of capacity in

the labour market. Trend underemployment is steady at 8.5%, meaning that 13.8%

of the population is either unemployed and looking for work, or would like to

work more hours.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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