Figures this morning from the Australian Bureau of Statistics show that 19,700 jobs were lost last month as people dropped out of the search for work, a development not too surprising given the continuing slide in consumer confidence and weak levels of business confidence. That was the first drop since October 2006, according to the ABS.
News of the surprise jobs loss saw the Aussie dollar lose three quarters of a cent as it plunged through 94 US cents to end around 93.88 just before Midday. Financial markets odds of another rate rise this year also dropped.
The news comes on top of falling or static retail sales, plunging home loan and building approvals.
The latest figures echo the National Australia Bank’s monthly business conditions survey, released Tuesday, which showed that employers were starting to question the need for new employees: and that proved to be accurate. The figures also support the trend showing up in the ANZ job ads series which have been three negative months in the first five months of the year, with a sharp loss of job ads in newspapers. Internet advertising is down, but remains strong, up 9.5% on a year ago.
The loss of jobs compares to the flood of confident forecasts from financial market economists and others for an average rise of 13,500 jobs in May. The participation rate retreated from April’s record 65.4% to 65.2% as people stopped looking for work, a sign of a lack of confidence in the jobs market.
That didn’t happen as the ABS said this morning that the number of people employed “decreased by 19,700 to 10,691,200. Full-time employment decreased by 10,400 to 7,645,200 and part-time employment decreased by 9,300 to 3,046,000.”
With the loss of jobs evenly spread across both full-time and part time employment, its clear companies are making small trims and cutting back on new hiring.
The ABS said remained steady at 476,700 and the number of people looking for full-time work fell 17,900 to 317,700 and the number of persons looking for part-time work increased by 18,000 to 159,000. The unemployment rate remained steady at 4.3%.
Perversely, the loss of jobs is “good” news for the markets as it lessens the chance of another rate rise and should instill some optimism especially that the Reserve Bank has got it right.