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Australian Employers Unexpectedly Cut Jobs in September

Australian employers unexpectedly cut payrolls in September, indicating that interest rates will probably remain at a record low for an extended period.

The number of people employed fell by 29,700 the statistics bureau said in Sydney today. That compares with a median estimate for a 15,500 increase and follows the bureau’s statement yesterday that it would review methodology used to calculate the jobs data. The jobless rate was 6.1 percent.

The Reserve Bank of Australia has flagged a period of rates stability after reducing the benchmark to a record-low 2.5 percent last year as it seeks to avoid a growth gap emerging in response to waning mining investment. Recent volatility in the jobs data, which prompted the bureau’s review, has made it difficult for policy makers and analysts to gauge the strength of the economy.

 “Gradual improvements in the non-mining economy are not yet sufficient to meaningfully lift labor demand,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said before the report. “Forward-indicators suggest improvement is on the horizon. Still, the recent ABS difficulties with the employment survey make us cautious about reading too much into the data.”

The Australian dollar traded at 88.33 U.S. cents at 11:55 a.m. in Sydney, from 88.27 cents before the data was released.

The number of full-time jobs increased by 21,600 in September, and part-time employment fell by 51,300, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, was 64.5 percent in September, it showed.

Seasonal Factors

“Over recent months key labor force series, when seasonally adjusted using previously observed seasonal factors, have exhibited unusual volatility,” the bureau said in today’s release. It has been unable to determine a definitive cause for this change in seasonality.

The statistics bureau said yesterday it will review how it calculates seasonally adjusted data after patterns in labor hiring in previous years didn’t occur in 2014. For July, August and September data it won’t adjust the raw jobs numbers, the bureau said. It initially reported a record 121,000 jump in August jobs and a surge in seasonally adjusted unemployment to a 12-year high of 6.4 percent in July.

“If the ABS had not set the seasonal adjustment factors to one, the seasonally adjusted estimate of total employed persons for Australia would have declined by approximately 172,000 persons between August and September 2014,” the bureau said today. The seasonally adjusted participation rate would have decreased by 1 percentage point, it said.

Traders are pricing in 1 basis point of increase to the benchmark interest rate over the next 12 months, according to an index of swaps from Credit Suisse Group AG in Sydney today.

“Labor market data have been unusually volatile of late,” RBA Governor Glenn Stevens said in a largely unchanged statement accompanying this month’s rates decision. “The bank’s assessment remains that although some forward indicators of employment have been firming this year, the labor market has a degree of spare capacity and it will probably be some time yet before unemployment declines consistently.”

Reinvent Your Career would like to thank Bloomberg News where this article first appeared.

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