Australia Looses Jobs in May

Australia unexpectedly lost jobs in May, ending a record 18 months of gains and sending the nation's currency lower on speculation the central bank may not raise interest rates again.

Companies cut 19,700 workers after adding a revised 37,500 in April, the statistics bureau said in Sydney today. 

The biggest decline in employment since September 2005 is the strongest signal yet that the Reserve Bank's two rate increases this year may be enough to cool the economy's 17-year expansion and damp inflation. Australian employers are mirroring job cuts in the U.S. and U.K. as oil prices surge to a record and global growth slows.

The number of full-time positions declined 10,400 in May and part-time jobs dropped 9,300, today's report showed. About half of the nation's 21 million people are employed.

Qantas Airways Ltd., Australia's largest carrier, said this month that it will slash services to Japan, shift other Asian routes to low-cost unit Jetstar and cut jobs in response to surging fuel costs. Crude oil climbed to a record $139.12 a barrel last week.

General Motors Corp.'s Australian unit, Holden, said last week that it will end production of four-cylinder engines at its Melbourne factory, where more than 500 people are employed. The company also cut 600 jobs at its Adelaide factory in March.

China's growing appetite for natural resources has seen companies including Rio Tinto Group expand mines, railways and ports, helping stoke 18 months of job gains through April that generated 456,000 positions in Australia.

The mining boom has driven expansion in Australia's $1 trillion economy, helping it weather the global credit crunch.

Reserve Bank Glenn Stevens and his board raised the benchmark interest rate to a 12-year high of 7.25 percent in March on concern a shortage of skilled labor would drive up wages and stoke inflation, already at the strongest since 1991.

The slump in Australian jobs follows reports that show the U.S. unemployment rate gained the most in more than two decades in May, and the U.K. jobless rate rose to a seven-month high.

Adding to signs the economy is moderating, consumer confidence slumped to the lowest level in almost 16 years in June, home-loan approvals dropped for a third month in April, and businesses were pessimistic for a fifth consecutive month in May, reports this week showed.

The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.2 percent in May from 65.5 percent in April, the figures showed.

Australia Looses Jobs in May, Bloomberg
6/11/2008 8:34:59 PM