Australia's Jobs Growth Slows as Economy Weakens

By Jacob Greber

Oct. 9 (Bloomberg) -- Australian employers hired fewer workers in September as the nation's 17-year economic expansion slows amid a drop in consumer spending.

The number of people employed rose 2,200 last month after increasing a revised 10,200 in August, the statistics bureau said in Sydney today. The median estimate of 21 economists surveyed by Bloomberg News was for no change. The jobless rate rose to 4.3 percent from 4.1 percent.

Companies such as Qantas Airways Ltd. and Ford Motor Co. are firing workers after the economy expanded at the slowest pace in more than three years in the second quarter. Signs that growth is cooling faster than forecast by the central bank was a key reason Governor Glenn Stevens cut the benchmark interest rate this week by 1 percentage point, the biggest reduction since a recession in 1992.

``We now expect the gradual slowdown in employment to continue,'' Bill Evans, chief economist at Westpac Banking Corp. in Sydney, said ahead of today's report.

The number of full-time positions declined 15,400 in September and part-time jobs increased 17,700. About half the nation's 21 million people are employed.

The Australian dollar traded at 66.90 U.S. cents at 11:37 a.m. in Sydney from 67.03 cents before the report was released. The two-year bond yield fell 1 basis point to 4.12 percent.

Job Cuts


Companies that have announced job cuts in Australia include Fairfax Media Ltd., Boeing Co., Ford, Starbucks Corp. and Australia and New Zealand Banking Group Ltd. Qantas, the nation's biggest airline, will fire 1,500 workers.

The jobless rate will rise ``a bit'' over the next year to 18 months, Governor Stevens told a parliamentary committee on Sept. 8. ``The rate of employment growth will slow. It is starting to do that already,'' he said.

Job-vacancy advertisements had their largest fall in more than seven years in August, a sign employers have already started paring hiring as the economy slows, according to a Sept. 8 report by ANZ Bank.

Uncertainty on financial markets is also eroding business confidence and prompting companies to review hiring plans. Australia's benchmark S&P/ASX 200 Index of stocks has tumbled 31 percent this year as a global credit squeeze threatens to trigger a worldwide recession.

Interest Rates

Stevens this week cut the benchmark lending rate by twice as much as economists forecast, to 6 percent, foreshadowing coordinated half-point cuts yesterday by the U.S. Federal Reserve, the European Central Bank, and four other central banks.

``An unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers,'' Stevens said on Oct. 7.

Slower jobs growth in Australia's oldest state, New South Wales, has been partially offset by a mining boom in Queensland and Western Australia that has stoked demand for skilled labor at companies including BHP Billiton Ltd.

The participation rate, which measures the labor force as a percentage of the population aged over 15, was unchanged at 65.1 percent, today's figures showed.

Today's unemployment report was compiled by the statistics bureau using a sample of businesses that was cut by 24 percent in July. The bureau, which reduced the survey because of budget cuts, has said that will increase the volatility of the figures.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net