- Paul Bloxham, HSBC chief economist
While increasing participation rate considered to be a good sign for economy, it could also send a country's unemployment rate to new highs. Thus, Australia saw its jobless rate jumping to the highest level in 12 years, largely due to a rise in a number of people, who are actively looking for work. According to the Australian Bureau of Statistics, seasonally adjusted unemployment rate came in at 6.4%, 0.3 percentage points higher than a month earlier, with the participation rate increasing by 43,400 to 64.8% compared with 64.7% in June, whereas 300 positions were lost from the economy. It is the first time since 2007 that Australia's unemployment rate has been higher than the U.S., which currently stands at 6.2%. The worse than expected data lowers expectations of a near-term interest rate lift as the nation's economy shows signs of weakness. Nevertheless, the headline jobless figure might be exaggerating the labour market weakness, as other employment indicators show companies hiring intentions improve. Earlier this week the RBA Governor Glenn Stevens said, after keeping the cash rate unchanged at ultra low level of 2.5%, that there has been some improvement in the labour market outlook, but he stressed that it would probably take some time before jobless rate fall consistently.
The Aussie Dollar slid to the lowest level in two months versus the Greenback following the release of downbeat employment data, with AUD/USD hitting 0.9263.
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