Australians asked to spend $5.2 billion before Christmas

CANBERRA/SYDNEY (Reuters) - Australia's government began to hand out more than A$8 billion ($5.2 billion) in cash to consumers ahead of Christmas, but some analysts say the money may not be enough to stop the country from sliding into recession.

The cash splurge comes after data showed the economy barely grew at all in the September quarter, when gross domestic product rose just 0.1 percent, its lowest pace in eight years, and with unemployment set to rise due to the global slowdown.

TD Securities senior strategist Joshua Williamson warned the spending package may not be enough to lock in long-term growth.

"As the package is a temporary measure, any growth on the consumption side of the national accounts in the December quarter from the package will unwind just as quickly in the first quarter of 2009."

The cash for families and pensioners is part of a A$10.4 billion economic stimulus package announced on October 14 and aimed at boosting confidence and retail sales.

The payments will bring more relief to consumers after the central bank slashed interest rates to a 6- year low last week and left the door open for more cuts to save its economy from recession.

Prime Minister Kevin Rudd wants people to spend the money in the run up to Christmas, saying the spending will help protect jobs and prevent the economy from slowing down further.

"If the government doesn't empower consumers at a time like this, in the midst of global financial crisis, then in fact we will have even greater challenges ahead," he said.

Underlining the depressed state of the economy, data showed last week that vehicle sales drove off a cliff in November as skittish consumers shied away from big purchases, which, together with more evidence of the poor state of the housing market, points to a miserable fourth quarter for consumption.

A survey showed on Monday that Australian businesses cut back sharply on job advertisements in November as the global financial crisis intensified, pointing to an inevitable rise in the number of those out of a job and more rate cuts.

JOBLESS RISE INEVITABLE

The survey from Australia and New Zealand Banking Corp showed job advertising in newspapers sank 12 percent in November, after a similar drop the month before. The combined fall was the biggest in the 30-year history of the series and fueled worries official data on employment on Thursday would show a reversal in what has been one of the most resilient parts of the economy.

"Recently, the labor market has surprised with its strength," Nomura economist Janu Chan said, adding that firms were cutting workers' hours rather than firing them.

"The slowdown in domestic demand should, however, inevitably lead to further weakening in job growth and a rise in the unemployment rate."

The jobs data is expected to show that 15,000 jobs disappeared in November after a surprise jump of 34,300 in October when firms took on thousands of part-time workers.

Australia and New Zealand Banking Group plans to cut another 400 jobs by the end of this year, bringing the total to around 800 as it struggles to cope with the global crisis, newspapers reported on Saturday.

The government's cash payments worth A$8.7 billion, or about 0.9 percent of gross domestic product, give 2 million families A$1,000 for each child, and give four million pensioners more than A$1,000 each. Payments will be made over two weeks.

Treasurer Wayne Swan said the move would boost GDP by between 0.5 and 1 percent, and create up to 75,000 jobs.

"This package is a substantial boost to our economy," Swan said, adding the he would keep all options open if further action was needed in 2009 to keep the economy growing. "We will assess that as we go through the early part of next year."

The government said it expects to pay out A$4 billion by Thursday, which businesses hope will provide them with a pre-Christmas boost.

"If people are saving for a rainy day, I can tell them it is pouring outside," Australian Retailers Association executive director Richard Evans told Australian radio.

(Writing by Jan Dahinten; Editing by Neil Fullick)