Australia May Have Added Jobs in June on Mining Boom

By Victoria Batchelor

July 9 (Bloomberg) -- Australian employment probably rebounded in June from the first jobs decline in 19 months, a sign the nation's mining boom is underpinning economic growth as domestic demand slows.

The number of people employed rose 10,000 last month after a 19,700 drop in May, according to the median estimate of 25 economists surveyed by Bloomberg News. The jobless rate held at 4.3 percent, the survey showed. The statistics bureau report is due at 11:30 a.m. in Sydney tomorrow.

China and India's growing appetite for commodities has prompted miners and energy companies, led by BHP Billiton Ltd. and Rio Tinto Group, to expand and hire workers. Exports rose to a record in May, bolstering the $1 trillion economy as slower consumer spending and rising costs prompt manufacturers, airlines and retailers to shed staff.

``Australia has a two-speed economy with a very strong resources sector but weakening household spending,'' said Stephen Roberts, director of research at Lehman Brothers Holdings Inc. in Sydney. ``We see employment rebounding in June as mining is helping to support the economy, ensuring the slowdown hasn't been too dramatic.''

Prior to the jobs decline in May, Australian employers had added extra workers every month from October 2006, the longest run of gains since the government began publishing monthly figures in 1978. The unemployment rate fell to 4 percent in February, the lowest in more than three decades.

Exports Increase

Australia's dollar, which was little changed at 95.43 U.S. cents at 10:30 a.m. in Sydney, has risen 8.7 percent this year. The nation's S&P/ASX 200 index of shares, which rose today, has fallen 21 percent this year.

Exports climbed to a record A$21.9 billion ($20.9 billion) in May, stoked by rising sales to China, the statistics bureau said last week.

BHP Billiton, the world's largest mining company, approved a $1.9 billion expansion in May of its Worsley alumina project in Western Australia. Rio Tinto plans to boost output by 26 percent at its Queensland Alumina Ltd. refinery.

``The economy retains enough momentum to keep generating jobs,'' said Michael Blythe, chief economist at Commonwealth Bank of Australia in Sydney.

Australia, the world's largest shipper of coal, iron ore and wool, may earn 12 percent more from commodity exports this financial year than forecast three months earlier because of higher prices, the government said on June 23.

Domestic Slowdown

As the mining boom supports the economy's 17-year expansion, higher interest rates are buffeting household spending and spiraling costs are hurting airlines and manufacturers.

Consumer confidence declined 6.7 percent in June to the lowest level since 1992, Westpac Banking Corp. reported today.

The Reserve Bank of Australia raised its benchmark interest rate to a 12-year high of 7.25 percent in March. The bank has boosted borrowing costs four times since August 2007 to cool inflation that is running at the fastest pace in almost two decades.

Six economists in the Bloomberg survey forecast the jobs report will show either no employment growth in June or the second consecutive monthly decline as higher interest rates and rising fuel prices damp the economy.

``Business confidence is very weak, so firms have probably reined in, or postponed, their hiring plans,'' said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney. ``We expect no jobs growth in June, given the recent string of soft domestic economic data.''

Bloomberg Survey

Business sentiment fell to a seven-year low, construction work declined and the number of job vacancies advertised on the Internet and in newspapers dropped by the most in almost two years in June, according to reports this week.

Goodyear Tire & Rubber Co., the U.S.-based tire maker, said last month it will close a Melbourne factory and fire 600 workers. Qantas Airways Ltd., the nation's largest carrier, announced plans in June to scrap regional routes and cut hundreds of jobs.

Following is a table of economists' estimates for the change in employment, the jobless rate and the participation rate in June:

                                   Jobless    Part.
                      Employment   Rate      Rate
---------------------------------------------------
Median                10,000       4.3%      65.3%
High                  25,000       4.5%      65.4%
Low Forecast         -10,000       4.2%      65.2%
No of replies           25          25        22
---------------------------------------------------
4Cast                 25,000       4.3%      65.4%
ABN Amro                   0       4.4%       --
AMP Capital                0       4.4%      65.2%
ANZ Bank              25,000       4.2%      65.2%
Ausbil Dexia          -5,000       4.5%      65.3%
Barclays Capital      12,300       4.4%      65.3%
BT Financial          10,000       4.3%       --
Citigroup              5,000       4.3%      65.2%
Commonwealth Bank     20,000       4.2%      65.2%
Deutsche Bank          5,000       4.3%      65.2%
GCI Capital            8,800       4.2%       --
Goldman Sachs         10,000       4.3%      65.2%
ICAP Australia        15,000       4.3%      65.3%
JPMorgan Chase             0       4.3%      65.2%
Lehman Brothers       20,000       4.4%      65.4%
Macquarie             10,000       4.4%      65.3%
Merrill Lynch         10,000       4.4%      65.3%
National Australia         0       4.3%      65.2%
Nomura Australia      15,000       4.3%      65.3%
St. George Bank       10,000       4.2%      65.2%
Suncorp Banking      -10,000       4.3%      65.2%
TD Securities          2,500       4.4%      65.3%
Thomson               25,000       4.2%      65.3%
UBS Australia         10,000       4.4%      65.3%
Westpac Bank          25,000       4.3%      65.4%
===================================================

To contact the reporter on this story: Victoria Batchelor in Sydney at vbatchelor@bloomberg.net.