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Heat on RBA as jobless rate rises to 5.2pc

AAP  |  16 May 2019Text size  Decrease  Increase  |  
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Australia's unemployment rate rose 0.1 percentage points in April to a worse-than-expected 5.2 per cent, adding pressure on the Reserve Bank to deliver a rate cut.

An increase in the monthly participation rate more than offset the 28,400 rise in total employment for the month, with Thursday's seasonally adjusted data from the Australian Bureau of Statistics also showing a 21,200 increase in the number of people without work.

Full-time employment for April decreased by 6,300 to 8.8 million people, while part-time employment increased 34,700 to 4.03 million.

This pushed the underemployment rate 0.3 points higher to 8.5 per cent.

The RBA this month said it would closely monitor the strength of the labour market as it mulls its policy settings, but BIS Oxford Economics analyst Sarah Hunter said the RBA would still be reluctant to cut the cash rate as early as next month from its historic low of 1.5 per cent.

"It will raise pressure on the board to loosen policy to support the economy in the second half of the year, particularly given a number of downside risks appear to be crystallising in the international economy," Hunter said.

Analysts expected the jobless rate for April to remain in a range of 5.0 and 5.1 per cent, before Thursday's upwards revision of the March unemployment rate to 5.1 per cent.

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JP Morgan Asset Management global strategist Kerry Craig said job growth must be fast enough to push the unemployment rate lower to keep the RBA from cutting rates.

“Business surveys are not looking encouraging and the unemployment rate will start to rise. A few months of data will be needed to discern a trend leaving the RBA on track for an August cut,” Craig said.

Thursday's figures showed the net movement of employed people was underpinned by about 300,000 people entering and leaving employment in the month.

The seasonally adjusted participation rate edged 0.2 percentage points higher to 65.8 per cent.

The Australian dollar dipped from 69.24 US cents after the data's release and was buying 69.16 US cents at 12.45pm Sydney time.

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