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Jobless rate rises in Nov, expected to go higher, economists say

By Jordan Chong
11 Dec 2008 5:42 PM

SYDNEY, Dec 11 AAP - The jobless rate inched up to its highest level in 12 months in November and economists expect much greater levels of unemployment next year as the nation grapples with the prospect of recession.

The unemployment rate was a seasonally adjusted 4.4 per cent in November, the Australian Bureau of Statistics said on Thursday, up from 4.3 per cent the previous month but slightly better than market expectations of 4.5 per cent.

JP Morgan chief economist Stephen Walters said Australia's unemployment rate was on track to hit nine per cent by the end of 2010, as the mining sector led the way with job cuts.

"Our call for a nine per cent jobless rate within two years is supported by the avalanche of job losses announced recently, including many in the mining sector, which led the charge during the long employment boom," Mr Walters said.

Westpac Banking Corporation senior economist Anthony Thompson said he expected the unemployment rate to reach six per cent by the end of 2009.

"However, currently extremely pessimistic consumers' unemployment expectations imply risks of a more severe deterioration," Mr Thompson said.

The economy shed 15,600 jobs in November, the ABS said, just the third decline in total employment in the past 17 months and slightly worse than market forecasts of a 15,000 decline.

There was a 24,400 fall in part-time employment, while the number of full-time jobs rose by 8,800 after declining for the past two months.

The number of unemployed persons has risen by 58,600 since the jobless rate hit a 33-year low of 3.9 per cent in February this year.

ANZ economist Riki Polygenis warned against reading too much into the monthly changes, given the data series' reduced sample size because budget cuts at the ABS had resulted in increased volatility.

Ms Polygenis said the labour market had held up relatively well compared to other industrialised economies.

"However, we do expect labour market outcomes to get worse before they get better against a backdrop of weaker global and domestic growth and high levels of uncertainty," Ms Polygenis said.

Some of Australia's major companies, such as ANZ Banking Group Ltd, Westpac, Qantas Airways Ltd, Ford Australia and Telstra Corporation Ltd, have all cut staff, or said they would, in response to difficult trading conditions here and overseas.

Rio Tinto Ltd added its name to the growing list on Wednesday when the company said it would reduce its global workforce by 14,000. The size of its Australian cull was unknown.

Commonwealth Bank of Australia economist James McIntyre said the pace of jobs growth had halved over the past six months.

"Given that monthly jobs growth needs to be about 18,000 to absorb new entrants into the labour force, we are likely to see the unemployment rate rise from here," Mr McIntyre said.

NSW, Australia's most populous state, had the highest unemployment rate at 5.2 per cent, which was a slight improvement from 5.3 per cent the previous month.

Citi managing director of economics Paul Brennan said NSW continued to bear the bulk of the pain in the labour market.

"NSW is the only state to record a significant fall in full-time employment this year," Mr Brennan said.

The biggest mover among the mainland states was the resources rich Western Australia - the state's unemployment rate jumped to 3.0 per cent in November, up sharply from 2.3 per cent the previous month.

Tasmania's unemployment rate climbed to 4.5 per cent, from 3.6 per cent.

The jobless rates of Victoria (4.4 per cent), Queensland (3.8 per cent) and South Australia (5.3 per cent) were unchanged in November.