Melbourne: Australia’s unemployment rate hit a four-year high of 5.2% in February as the job market took on characteristics consistent with a recession, economists said Thursday.
Prime Minister Kevin Rudd said the figures showed the government was right to press ahead with a 42 billion Australian dollar ($27.3 billion) stimulus package to help offset the effects of the global financial crisis.
“Had we waited and done nothing, instead of acting decisively, these unemployment figures would be much worse,” Rudd said.
Official figures showed the unemployment rate rose 0.4 points from the previous month to its highest level since September 2004, with the number of full-time jobs down 53,800 and part-time jobs up 55,600.
The spike in the jobless rate exceeded economists’ predictions of a 5.0% result. It has risen 0.7 points in calendar 2009 and 1.3 points in the 12 months to February.
Unemployment was higher despite the net 1,800 increase in jobs over the month because of a rise in the number of people actively looking for work.
AMP Capital Investors Chief Economist Shane Oliver said the slump in full-time jobs in favour of part-time positions was a sign the labour market had continued to weaken.
“(It’s) consistent with employers becoming a lot more cautious and cutting back on hours ... and that sort of thing tends to happen in a recession,” he told Dow Jones Newswires.
The government had not expected the jobless rate to reach 5.0% until June. Official forecasts predict it will hit 7.0% by mid-2010.
But Oliver said it was more likely to reach 9% next year, placing increased pressure on the Reserve Bank of Australia (RBA) to cut interest rates further in a bid to cushion the economy from the global downturn.
“The deteriorating labour market along with the continuing deterioration in the global economic outlook is consistent with the RBA cutting interest rates again next month by 0.5 percentage points and taking them to below two percent by year end,” he said.
The central bank left rates on hold at 3.25% Tuesday as it waited to see if the government stimulus packages and previous rate cuts totalling four percentage points since September would insulate Australia’s economy.
Deputy Prime Minister Julia Gillard declined to say whether she believed the government’s forecasts on unemployment were now outdated but said it was clear that the global recession was having an impact on Australian jobs.
“The government has always said that we wouldn’t be immune from the global financial crisis and the global recession that has wreaked so much havoc around the world,” she said.
Australia recorded its first quarter of negative growth in eight years during the final three months of 2008.
Many analysts say the economy is probably already in recession, usually defined as two successive quarters of negative growth.