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Australia Reports Unexpected Job Gains; Unemployment Rate Falls

Australia Reports Unexpected Job Gains; Unemployment Rate Falls

The number employed persons in Australia unexpectedly increased in May, owing to an increase in part-time employment, the latest report from the Australian Bureau of Statistics showed Thursday. The report also revealed a marginal dip in the unemployment rate.

The number of employed persons rose 1,100 from a month earlier to 11.66 million in May. Economists expected a decline of 10,000. This comes after a month-on-month gain of 45,000 in April.

"Overall May data was a better than expected print on employment but it was still a soft report on the state of the Australian labour market," Westpac Institutional Bank said in a note.

The statistical office report showed that full-time employment decreased by 5,300 between April and May, which was offset by an increase of 6,400 part-time jobs.

The unemployment rate edged down to 5.5 percent in May as expected from 5.6 percent in April. The number of unemployed individuals decreased by 3,600 or 0.5 percent month-on-month to to 682,900.

According to Westpac, the fall in unemployment rate was all due to a decline in participation resulting in a decline in the labour force.

The participation rate decreased to 65.2 percent in May from 65.3 percent in April. The aggregate monthly hours worked also fell by 11.5 million hours.

A consumer survey by Westpac and the Melbourne Institute revealed Wednesday that households were more upbeat about the state of their own finances, despite being pessimistic about the prospects of the broader economy. Consumer confidence rebounded in June after a sharp deterioration in the past two months, according to the survey.

The Australian economy expanded at a modest pace of 0.6 percent quarter-on-quarter in the first quarter, as gains in trade and consumer spending offset a decline in business investment. Though the economy managed to retain the momentum seen in the fourth quarter of 2012, the growth was modest and was weaker than expected.

The Reserve Bank of Australia kept the benchmark cash rate unchanged in June after cutting it to record low of 2.75 percent in May. The bank has kept the door open for further easing if economic situation worsens.

Meanwhile, a survey by the Melbourne Institute showed today that Australian consumers' inflation expectations stayed unchanged at 2.3 percent in June, within the RBA's target band of 2-3 percent.

The modest inflation and wage expectations give "the RBA the option to focus on growth rather than inflation, and it is likely that the RBA will loosen monetary policy further to stimulate demand should activity show further signs of weakening," said Viet Nguyen, a Research Fellow at the Institute.

by RTT Staff Writer

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