Thursday March 12, 08:33 AM
Australian jobless rate at four-year high as 'economic cyclone' hits
By Neil Sands
MELBOURNE (AFP) - Australia's unemployment rate hit a four-year high of 5.2 percent in February as the "global economic cyclone" tore into the job market, Prime Minister Kevin Rudd said Thursday.
Rudd said the figures showed the government was right to press ahead with a 42 billion Australian dollar (27.3 billion US) stimulus package to help cushion an economy that analysts say may have already tipped into recession.
"No government can stop a global economic cyclone from coming across our shores, but a responsible government seeks to reduce the impact of that damage," he told parliament.
Rudd said the global downturn was directly affecting Australian jobs, citing a more than 25 percent fall in exports recorded by China, Australia's largest trading partner, in February.
"There will be an impact here in Australia and there will be an impact around the world," he told parliament. "Therefore, that underpins the necessity for us prosecuting a strategy to deal with these circumstances."
Official figures showed the unemployment rate rose 0.4 percentage points from the previous month to its highest level since September 2004, with the number of full-time jobs down 53,800 and part-time jobs up 55,600.
The spike in the jobless rate exceeded economists' predictions of a 5.0 percent result. It has risen 0.7 points in calendar 2009 and 1.3 points in the 12 months to February.
Unemployment was higher despite the net 1,800 increase in jobs over the month because of a rise in the number of people actively looking for work.
AMP Capital Investors Chief Economist Shane Oliver said the slump in full-time jobs in favour of part-time positions was a sign the labour market had continued to weaken.
"(It's) consistent with employers becoming a lot more cautious and cutting back on hours ... and that sort of thing tends to happen in a recession," he told Dow Jones Newswires.
The government had not expected the jobless rate to reach 5.0 percent until June. Official forecasts predict it will hit 7.0 percent by mid-2010.
But Oliver said it was more likely to reach nine percent next year, placing increased pressure on the Reserve Bank of Australia (RBA) to cut interest rates further in a bid to cushion the economy from the global downturn.
"The deteriorating labour market along with the continuing deterioration in the global economic outlook is consistent with the RBA cutting interest rates again next month by 0.5 percentage points and taking them to below two percent by year end," he said.
The central bank left rates on hold at 3.25 percent Tuesday as it waited to see if the government stimulus packages and previous rate cuts totalling four percentage points since September would insulate Australia's economy.
Westpac Banking Corporation senior economist Anthony Thompson said forward indicators were showing the unemployment rate would climb more steeply through the year.
"The writing is on the wall as far as the labour market outlook is concerned," he said.
Australia recorded its first quarter of negative growth in eight years during the final three months of 2008.
Many analysts say the economy is probably already in recession, usually defined as two successive quarters of negative growth.
Deputy Prime Minister Julia Gillard declined to say whether she believed the government's forecasts on unemployment were now outdated, but insisted the figures would have been worse if it had not acted.
"The government has always said that we wouldn't be immune from the global financial crisis and the global recession that has wreaked so much havoc around the world," she said.
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