SYDNEY: Australia’s unemployment rate unexpectedly fell to 6.0 percent in May, data showed on Thursday, in a sign the economy could be starting to better adapt to the end of a mining investment boom.
Some 42,000 positions were added in the month, much higher than the 10,000 predicted by analysts, as the jobless rate ticked down from an adjusted 6.1 percent in April.
The increase in employment was driven by part-time jobs, which rose 27,300 while full-time roles were up 14,700, the Australian Bureau of Statistics said.
The May figures were better than expected, with the consensus of economists that the unemployment rate would remain steady.
The Australian dollar jumped three quarters of a US cent on the news to 77.93 US cents.
“The 42,000 gain in Australian employment in May will no doubt add to claims that Australia’s economy has weathered the end of the mining boom well,” said Capital Economics senior Asia economist Daniel Martin.
“However, the reading almost certainly exaggerates the strength of the labor market, while the sharp drop in corporate profits over the last year suggests that far weaker employment growth lies ahead.”
The fall comes on the back of data this month showing the mining-driven economy grew a stronger-than-expected 0.9 percent in the first quarter of the year, boosted by exports and consumer spending.
Those figures reinforced a decision by the central bank in June to keep interest rates on hold after two cuts this year.
Martin said the fall in the unemployment rate, on the back of the growth numbers, would be taken by some as evidence that the economy was in good health but added: “We disagree. A number of temporary factors propped up GDP growth in the first quarter, while the full impact of the terms of trade shock is yet to be felt.”
Australia posted its worst monthly trade deficit on record in April, with imports exceeding exports by nearly Aus$3.9 billion.
The Australian economy has struggled to fill the gap left by the end of the boom in mining investment, which has helped it avoid a recession for more than two decades.
Slowing growth in China, Australia’s largest trading partner, as well as recent plunges in commodity prices have weighed heavily.
The rocky transition away from mining-led expansion has seen the unemployment rate slowly increase over the past year, peaking at a revised 6.3 percent in January.
AMP Capital chief economist Shane Oliver said the May jobs data supported his view “that the economy is nowhere near as weak as the doomsayers would have it” and supported a case for the central bank to leave rates on hold again at its July meeting.
But he added that it was not convincing enough to remove the Reserve Bank of Australia’s easing bias.
“With the weak outlook for non-mining investment, a fall back in consumer confidence and a still too high Australian dollar another rate cut at the August RBA meeting remains a 50/50 proposition,” he said.