SYDNEY (Reuters) - Australia’s unemployment rate is expected to hold steady at a four-year high in September, but analysts suspect a rise to 6 percent and above, levels not seen in a decade, is only a matter of time with the economy still struggling to gain momentum.
Official data on Thursday is expected to show the unemployment rate unchanged at 5.8 percent in September despite the creation of 15,000 jobs, median forecasts in a Reuters poll show. Employment fell in both July and August.
National elections on September 8 are expected to have provided a temporary boost to employment, but longer-term pressures on the jobs market remain.
Miners are expected to keep shedding jobs as they shift to a less labor-intensive phase after an investment boom and cut costs, while firms in other sectors are cautious about hiring as they face a still-strong currency and uncertain global outlook.
As such, analysts said the jobless rate should trend higher. It has already risen from a low of 5.0 percent in April last year, and a move to 6 percent and above would take it to highs not seen since mid-2003.
The Reserve Bank of Australia is predicting modest employment growth into 2014, reflecting an economy that is growing at a below-potential pace.
That would drive the jobless rate gradually higher for a year or so, before leveling out and then declining as the economy eventually picks up steam, the RBA has said.
Forward-looking indicators on Tuesday pointed to a soft labor market. The ANZ job advertisements report showed only a modest increase in September after six months of declines, while the NAB business confidence survey showed employment conditions remaining subdued.
This is one reason why several economists still expect the RBA to keep monetary policy loose and even cut rates again if necessary. It has already slashed the cash rate by 225 basis points since November 2011 to a record low of 2.5 percent.
“Based on the most recent RBA statement, we have decided to delay our rate cut call from November to February, allowing the RBA time to pause and watch the data,” National Australia Bank Chief Economist Alan Oster said.
Debt markets price in a 20 percent chance of a November rate cut, with interbank futures pricing a 50-50 chance by April. Any major disappointment in Thursday’s data will no doubt see investors quickly raise their bets on a November easing.
Editing by John Mair