Australia lost jobs in April after two strong months
Australia's economy lost jobs April after two strong months of employment, underscoring the continued fragility of the labor market.
The nation's employment declined by 2,900, data showed on Thursday, missing Reuters' forecast for a 5,000 rise. The figure was made up of a fall of 21,900 in full-time employment and a 19,000 rise in part-time employment.
However, March employment was revised up to show a gain of 48,200, and that followed a 38,000 rise in February. Year to April, 177,600 net new jobs were created while the labor force expanded by 230,900.
Meanwhile, the jobless rate edged up to 6.2 percent in April from 6.1 percent in March.
The Australian dollar initially dipped on the headline miss but quickly recovered back to $0.7960.
"Today's figures do little to alter our expectation that the unemployment rate will gradually inch higher through the year, consistent with forecasts for below-trend growth. This will continue to drive soft growth in wages and household income," said Riki Polygenis of ANZ Research.
"For monetary policy, this outlook is consistent with the RBA [Reserve Bank of Australia] incorporating some form of easing bias in tomorrow's Friday's 'Statement on Monetary Policy'," he added.
The RBA on Tuesday cut interest rates for the second time this year, taking the benchmark lending rate to a record low of 2 percent. The central bank is due to release its quarterly policy statement on Friday which some predict could include a downgrade of growth forecasts for the economy.
Despite the soft April figures, the RBA might still revise downwards its peak of 6.5 percent forecast for Australia unemployment in its Friday statement, according to Daniel Martin at Capital Economics, although the firm's own forecast is a lot more bearish.
"We still think that the unemployment rate could get close to 7 percent by the end of the year, and expect the central bank to respond by cutting rates again," Martin said.
Other economists expect the RBA to stand pat on rates for the near term, especially after central bank's fairly upbeat outlook for the economy following its monetary decision on Tuesday.
"Our base case remains that rates are on hold at 2 percent, but with the risks on the downside particularly if the Australian dollar misbehaves," Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note.
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