Australian jobs unexpectedly fall in September

[SYDNEY] Australian employers unexpectedly cut jobs in September, signaling record-low interest rates are yet to put the economy on a sustainable footing and offset a slump in mining investment.

Employment fell 5,100 from August compared with a median forecast of a 9,600 increase. The jobless rate held at 6.2 per cent, matching the median forecast. Full-time jobs fell 13,900; part-time employment rose by 8,900 . The participation rate, a measure of the labor force as a proportion of the population, fell to 64.9 per cent from 65 per cent in August and compared with a median forecast of 65 percent

The central bank cut its benchmark rate to a record-low 2 percent in May but investment by non-mining firms has so far failed to pick up leaving housing construction as one of the few bright spots in the economy.

"The labor market's resilience masks weak fundamental trends, which are likely to weigh on domestic demand in future," Konstantinos Venetis, an economist at Lombard Street Research, said in a research note ahead of the release. "The RBA's task is only going to get harder from here. Domestic and external macro headwinds are set to intensify, skewing the risks for real GDP growth to the downside." The Australian dollar fell and traded at 73.15 US cents at 11.41 am in Sydney, from 73.40 cents before the data was released.

The statistics agency has in the past cited challenges in compiling the report and following large swings in the monthly jobs numbers in 2014 it reviewed the agency's data calculation method. Economists in August questioned the strength of a reported 38,500 jump in employment for July.

Australia's terms of trade, or export prices relative to import prices, dropped 3.4 per cent in the second quarter and are down 30 per cent from their 2011 peak, reflecting the country's dependence on China, which is going through its own economic transition.

Oil and gas producer Santos Ltd. said this week it will cut 200 jobs at its Eastern Australian business as part of an ongoing drive to reduce costs amid low oil prices.

Traders were pricing in a 37 per cent chance of another rate cut in November ahead of the data release with the odds rising to 48 percent for a reduction by December.

BLOOMBERG