World Economy

Australia Economy Shows Hiring Turnaround

Australia Economy Shows Hiring TurnaroundAustralia Economy Shows Hiring Turnaround

Australia’s economy added 39,100 jobs in November, more than double economists’ estimates and led by full-time positions, as a higher participation rate signaled a healthier labor market.

The data showed a turnaround in hiring as full-time jobs came to the fore and the participation rate reversed declines of recent months, bringing optimism to an economy that contracted last quarter and where consumer confidence has weakened, Bloomberg reported.

It also validates the central bank’s forecast hiring would improve in coming months after mixed messages from the labor market, and suggests policy makers will extend an interest-rate pause; the currency was little changed as Federal Reserve tightening overshadowed local news.

The Reserve Bank of Australia has kept the cash rate at a record-low 1.5% for the past four months as it gauges which way the economy will break.

Gross domestic product fell in the three months through September, just the fourth drop since a 1991 recession, while commodity prices led by coal are retracing highs from the mining boom era.

The leap in employment “provides further evidence that the fall in GDP in the third quarter was a blip rather than anything more worrying,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics Ltd.

“And the fall in the underemployment rate suggests that the excess labor supply is being used up, although our analysis suggests it may take two years to absorb it all.”

Queensland, the heart of the nation’s resurgent coal industry, led job gains with 38,600 hires, bringing to an end three months of losses.

Western Australia, which has struggled with the unwinding of mining investment, recorded a jump in its unemployment rate to 6.9% from 6.5%.

The rustbelt state of South Australia recorded the highest unemployment at 7%.

Member of the Australian House of Representatives Scott Morrison’s mid-year budget update Sunday is likely to show a deterioration in the federal government’s already-weak fiscal outlook, confirming that the “temporary” deficit Wayne Swan, former prime minister, announced in 2009 will not be closed until at least the early 2020s.

Finance Minister Mathias Cormann Saturday confirmed as much, saying that the surprise pickup in commodity prices since the May budget would not offset a downgrade of tax revenue from weaker than expected wages and profits. The May budget projected close to another $85 billion of deficits over the coming four years following nearly $320 billion over the previous eight. Today’s fiscal picture won’t be any prettier.

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