Sept. 12 (Bloomberg) -- Australia’s rise in unemployment last month doesn’t fully reflect the demand for workers in an economy that “continues to outperform” the U.S. and Europe, Treasurer Wayne Swan said.
“Recent jobs data has underestimated the strength of demand for labor in our economy given an increase in working hours,” Swan said yesterday in his weekly economic note.
Australia’s jobless rate jumped to a 10-month high of 5.3 percent in August, the second straight monthly rise, according to a government report Sept. 8. Prime Minister Julia Gillard’s administration is trying to counter declines in consumer and business sentiment that last month helped lift the ranks of the jobless to 636,800, the most since October.
“Many part-time workers have been picking up a few extra hours each week,” Swan said. “Had employers met the increase in labor demand by hiring new workers, we would have seen an additional 110,000 jobs created since the start of the year.”
Swan and Gillard yesterday announced an Oct. 6 conference in Canberra focusing on job creation, the future of manufacturing and “adapting to the high dollar.” The meeting will include 80 participants from business, unions, academia and government, they said.
The Australian economy, which has avoided a recession for two decades, is getting a lift from mineral extraction. Mining investment is projected to total A$82.1 billion ($86 billion) in the 12 months ending June 30, 45 percent higher than last fiscal year, as companies such as BHP Billiton Ltd. feed China and India’s demand for coal, iron ore and natural gas.
Australia’s gross domestic product grew 1.2 percent from the first quarter in the three months through June, a government report showed Sept. 7. That gain was stronger than the 1 percent advance estimated by economists in a Bloomberg News survey, and the 1.4 percent rise in GDP from a year earlier was double the forecast increase.
“Our economy grew at six times the pace of Europe and the U.S. last quarter,” Swan said. “It was a reality check for the doomsayers that have been talking our economy down in recent times” because “businesses are investing with confidence, incomes are rising, and household consumption remains healthy at around its trend level.”
The mining boom has helped boost the nation’s currency 13.5 percent against the U.S. dollar in the past year, hurting the export competitiveness of manufacturers such as Melbourne-based BlueScope Steel Ltd., the shares of which matched a record closing low on Sept. 9.
“On top of this, the lingering effects of the global financial crisis and continuing international uncertainty have resulted in Australian consumers being a lot more cautious in their spending,” Swan said. “This is making life harder for sectors like manufacturing, tourism and retailing.”
Weighing on consumers are the highest borrowing costs in the developed world. The Reserve Bank of Australia earlier this month kept the official cash rate target at 4.75 percent, a level it said Sept. 6 “has been exerting a degree of restraint.” RBA Governor Glenn Stevens hasn’t changed the benchmark rate since he last raised it in November.
Clouding Australia’s outlook is concern the world’s largest economy is slowing. Employment in the U.S. unexpectedly stagnated in August as employers became less confident in the strength of the recovery, and the jobless rate held at 9.1 percent, according to a Sept. 2 report.
Swan also said a tax forum he’s convening next month will focus on ways to keep Australia’s government debt under control.
“We’ve seen how important it is to maintain a strong budget position in recent months as the United States and Europe have struggled to get their public finances on a sustainable footing,” he said. “The government will not be in the cart for any measures that compromise our strict fiscal discipline.”
--Editors: Paul Tighe, Jim McDonald
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