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Australian unemployment rate unexpectedly falls to 5.7% in March

Thursday, April 14, 2016 - 10:21

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Australia's jobless rate unexpectedly fell in March as a lift in business confidence was reflected in the labour market, signaling the economy's resilience to a resurgent currency.

[SYDNEY] Australia's jobless rate unexpectedly fell in March as a lift in business confidence was reflected in the labour market, signaling the economy's resilience to a resurgent currency.

Unemployment dropped to 5.7 per cent from 5.8 per cent; economists predicted 5.9 per cent.

Employment rose 26,100 from February; economists forecast 17,000 gain.

Full-time jobs fell by 8,800; part-time employment rose by 34,900.

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Participation rate, a measure of labour force as a share of the population, held at 64.9 per cent; economists predicted 65 per cent.

The report is further evidence that record-low interest rates are aiding a revival in industries like construction, tourism and education that are helping Australia soak up unemployed miners as a resource boom winds down.

Still, the outlook for business investment remains weak and clouds remain over China, Australia's biggest trading partner.

The economy recorded a surge in jobs in October and November, though the scale of the increases brought renewed skepticism about the accuracy of the labor force data, which the Australian Bureau of Statistics has acknowledged in the past.

At the same time, data in March showed the economy grew 3 per cent in the final three months of last year, suggesting there was at least some signal in the strong jobs reports.

POSITIVE TONE

"The labour market retains a positive tone," Michael Blythe, chief economist at Commonwealth Bank of Australia, the nation's biggest lender, said ahead of the release. "The local economy is about three quarters of the way through the adjustment path involving the decline in mining-related investment. Accommodative monetary and fiscal policy settings have assisted with the adjustment by boosting the interest rate sensitive areas of the economy, like residential construction and related retail."

The Australian dollar traded at 76.45 US cents at 11.36am in Sydney, from 76.35 cents before the data was released.

Australia is grappling with the fallout from weaker prices of its key commodity exports as Chinese demand eases and newly- opened mines boost supply. The Reserve Bank of Australia cut its benchmark rate to 2 per cent in May last year and the currency had been on a downward trajectory until mid-January, providing further assistance to exporters.

Yet financial turmoil in China and global monetary policy running at cross-purposes - from negative rates in Europe and Japan to the start of a tightening at the Federal Reserve - have complicated local policy makers' task of navigating the economy to a post-mining future.

A further impediment has been a rebound in the Aussie, which climbed more than 7 per cent in March alone and was the best performer in a group of 10 major currencies.

RBA Governor Glenn Stevens, in his statement this month following the decision to leave rates on hold, warned: "an appreciating exchange rate could complicate the adjustment under way in the economy." Credit Suisse Group AG said this month the company had boosted its overall Australian headcount by 50 this year after hiring a number of private banking relationship managers, the Australian Financial Review reported April 7.

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