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INSTANT VIEW 2-Australia employment falls as expected in Nov
SYDNEY, Dec 11 (Reuters) - Australian employment fell in November while the jobless rate ticked higher in what is expected to be just the start of a protracted period of weakness for the once-robust labour market. Leading indicators such as job advertisements and business surveys have shown stark weakness in the last few months pointing to a sizable rise in unemployment in the months ahead. Still, the drop in jobs in November was not as large as many investors had bet on and a rise in full-time jobs suggested the labour market may not deteriorate as rapidly as feared. ************************************************************* KEY POINTS: - Nov employment -15,600 mth/mth, seasonally adjusted (Reuters poll: -15,000) - Nov full-time employment +8,800, part-time -24,400 - Nov unemployment rate 4.4 percent, seasonally adjusted (forecast 4.5 pct) - Nov participation rate 65.1 percent, seasonally adjusted (forecast 65.2 pct) - For a brief data table click on COMMENTARY: BRIAN REDICAN, SENIOR ECONOMIST, MACQUARIE 'A better result than many had expected given how bad November was around the world. The resilience of the labour market this year has been nothing short of remarkable given everything that's happened. It helps provide time for rate cuts and fiscal stimulus to work on consumer confidence. However, next year is going to be all about rising unemployment and we see it reaching 6 percent by year-end. A really big fall in employment would have added to the pressure for another large cut in interest rates, and quickly. But the case is still there for more easing.' JOHN EDWARDS, CHIEF ECONOMIST, HSBC 'The job number was a bit stronger than the market anticipated, particularly in full-time employment. This is not a bad report given the weakness we've seen in other indicators in the last three months. We will see weaker employment through 2009 but this suggests the labor market is a bit stronger than expected and that the Australian economy has still a reasonable chance to avoid a recession through 2009. I expect a further rate cut in Q1 2009 but we are getting towards the end of the easing episode. I am looking at a 3.5 percent cash rate.' STEPHEN WALTERS, CHIEF ECONOMIST, JP MORGAN 'It still understates what's going on in the real world. If you use any guide like the amount of jobs that have been cut anecdotally in the last six to eight weeks, there's been a heck of a lot more than 15,000. So there's a lot of seasonal fun and games with these numbers as always. But we've embarked on a move up in the unemployment rate that will be extended for a couple of years, and we're only just in the early days of that. We're suggesting the economy is in recession, that GDP will contract in the current quarter. We're still saying the Reserve Bank's not finished (cutting rates). But there's no case yet for an emergency meeting in January, which is all the talk at the moment.' SU-LIN ONG, SENIOR ECONOMIST, RBC CAPITAL MARKETS 'It confirms the weakening in the labour market, but the deterioration is fairly modest at this juncture, I think the market is braced for worse than this. What's worrying is the leading indicators portend to a much weaker labour market going forward than what today's numbers would suggest.' WARREN HOGAN, HEAD OF AUSTRALIAN ECONOMICS, ANZ 'The only surprise was the strength of the survey was in full-time employment, with a big decline in part time, which seems to be counter-intuitive. This isn't capturing the turn in the labour market. It does suggest we are obviously entering a period of weaker labour demand. But all up, it was pretty much as expected. It lends itself to the case that unemployment is going to move up gradually rather than quickly.' MICHAEL BLYTHE, CHIEF ECONOMIST, CBA 'It looks like the economic slowdown has caught up with the labour market and unfortunately we are going to have to get used to these negative numbers over the coming months...It's a fairly modest deterioration all things considered and the unemployment rate is, by any long-term comparison, still extremely low. I think it's not enough to see the Reserve Bank rushing back in January to have another go (at cutting rates).' MARKET REACTION: The Australian dollar blipped higher as the jobs data were not as dire as some bears had been betting on. Likewise, bill futures trimmed gains as the data did not add to already aggressive expectations of more rate cuts. LINKS: - The Australian Bureau of Statistics Web site is: [url]www.abs.gov.au[/url] - For all Australian news and data, 3000 Xtra users can click on BACKGROUND: - The median forecast had been for a fall of 15,000 in employment in November, while estimates ranged from a drop of 30,000 to an increase of 15,000. - The jobless rate was seen ticking up to 4.5 percent, from 4.3 percent in October, with a range of 4.4 to 4.7 percent. - The labour market has proved surprisingly resilient this year, partly because a long-standing shortage of skilled workers made employers reluctant to lay people off. - But leading indicators of employment took a marked turn for the worse in October and November, with job advertisements tumbling and business conditions the worse since 1992. - Most analysts now expect unemployment will rise steadily toward 6 percent or more by the end of next year, and a few even fear an increase to 9 percent. - The Reserve Bank of Australia (RBA) has always responded to rising unemployment by cutting interest rates and anticipated the latest deterioration by easing 300 basis points since September. - Analysts caution that past cuts to the size of the labour survey make it more volatile and less reliable. (Reporting by Sydney bureau, Editing by James Thornhill) Keywords: AUSTRALIA ECONOMY/VIEW4 ([email][email protected][/email] ; +61 2 9373 1813; Reuters Messaging: [email][email protected][/email] ) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.