Australian Employers Cut 21,400 Jobs as Exports Slow (Update3)

July 9 Australian employment fell in June, pushing the jobless rate to the highest in almost six years, as the global recession reduced demand for iron ore and coal exports and prompted mining companies to fire workers.
The number of people employed dropped 21,400 from May, the statistics bureau said in Sydney today. The median estimate of 21 economists surveyed by Bloomberg was for a decline of 20,000. The jobless rate rose to 5.8 percent from 5.7 percent.
Central bank Governor Glenn Stevens left borrowing costs at a half-century low of 3 percent this week for a third month to help stem firings at companies including BHP Billiton Ltd. Advertisements for job vacancies tumbled in June for a 14th month, a sign unemployment may rise in coming months.
“Full-time employment continues to fall so there is weakness there,” said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney. Still, the “rate of deterioration hasn’t increased as most people thought.”
The number of full-time jobs dropped 21,900 in June and part-time employment increased 400, today’s report showed.
The Australian dollar traded at 78.11 U.S. cents at 12:28 p.m. in Sydney from 78.04 cents before the report was released. The currency has jumped 8.5 percent in the past three months, making it the second-best performer against the U.S. dollar among the currencies of the major industrialized nations.
Consumer Confidence
Australia’s economy has so far skirted the worst global recession since the Great Depression. Gross domestic product rose 0.4 percent in the first quarter, making it one of the few major economies including China and India to expand.
Consumer confidence jumped to the highest level since December 2007 and home-loan approvals rose for an eighth month, reports showed yesterday.
“Leading indicators suggest we should be losing around 30,000 to 40,000 jobs per month, so the Reserve Bank would be happy with the recent performance of the labor market where trend losses are just 5,000 per month,” said Spiros Papadopoulos, an economist at National Australia Bank Ltd. in Melbourne.
To help boost employment and cushion the economy against slower global demand for natural resources, central bank policy makers slashed the overnight cash rate target by a record 4.25 percentage points to 3 percent between September and April.
Cash Handouts
Prime Minister Kevin Rudd’s government has also distributed A$12 billion ($9.4 billion) in cash handouts to households this year and is spending A$22 billion to upgrade roads, railways, hospitals and ports.
BHP Billiton, the world’s biggest mining company, is shedding 3,400 workers in Australia after shuttering a nickel mine in January and reducing coking coal output. Qantas Airways, the nation’s largest carrier, said in April that it will cut 1,750 jobs as demand for business and first-class travel wanes.
ANZ Bank said today it will scrap 248 jobs as it closes mortgage administration offices in cities including Sydney, Brisbane and Perth. The bank is Australia’s fourth largest.
“Weaker demand for labor is leading to lower growth in labor costs,” Reserve Bank Governor Glenn Stevens said on July 7. That gives policy makers “some scope for further easing of monetary policy, if needed,” he added.
Reports this month showed the construction industry shrank in June at a faster pace, exports slumped 5 percent in May from April and home-building approvals tumbled 12.5 percent, the biggest drop since November 2002.
Job Advertisements
Jobs advertisements dropped 6.7 percent last month from May and 51.4 percent from a year earlier, the largest annual decline since ANZ Bank began recording the figures in 1998.
Still, other reports suggest Australia’s economy will continue expanding this year. An index of consumer sentiment published yesterday by Westpac Banking Corp. climbed 23.2 percent in June and July, the largest two-month gain since the survey began in 1975.
The International Monetary Fund said the global economic rebound next year will be stronger than it forecast in April as the financial system stabilizes and the pace of contractions from the U.S. to Japan moderates.
The Washington-based lender said in a revised forecast released yesterday that the world economy will expand 2.5 percent in 2010, compared with its April projection of 1.9 percent growth.
Woolworths, Australia’s biggest retailer, has said it expects to add 7,000 workers and reaffirmed its forecast for an increase in annual profit of as much as 12 percent.
Rate Outlook
David Jones Ltd., Australia’s second-biggest department store chain, said last week that earnings after tax will rise by between 20 percent and 30 percent in the six months ending July 25. “The stimulus package has been good for confidence,” Chief Executive Officer Mark McInnes told reporters on June 30.
Investors expect Australia’s overnight cash rate target will be higher in 12 months, according to a Credit Suisse Group AG index based on swaps trading. Traders forecast the key interest rate will be 44 basis points higher in a year, the index showed at 12:22 p.m. in Sydney from 46 basis points just before the report was released and 48 basis points late yesterday.
The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.3 percent in June from a revised 65.4 percent, today’s report showed.