Unemployment rate hits 4-year high in August

By a staff reporter, with AAP

The unemployment rate in Australia rose to a four-year high in August in line with expectations, according to data from the Australian Bureau of Statistics.

The data shows the total number of jobs in Australia fell by 10,800 to a seasonally adjusted 11.64 million in the month, compared to a downwardly revised 11.65 million in July.

Notably, the decline in the number of jobs sharply missed economists' expectations which had centred on the creation of 10,000 jobs.

As a result the unemployment rate rose to 5.8 per cent, compared with 5.7 per cent in July.

The median forecast from an AAP survey of 11 economists was for the unemployment rate to rise to 5.8 per cent in the month.

Full-time employment fell 2,600 to 8.13 million in August and part-time employment was down 8,200 to 3.51 million.

The August participation rate was 65.0 per cent, down from 65.1 per cent in July.

The participation rate is the proportion of the population that have a job, are looking for work or ready to start work.

Aggregate monthly hours worked increased 1.1 million hours to 1.65 billion hours.

Rate could deteriorate further: analysts

JP Morgan economist Tom Kennedy said the disappointing result was a sign of things to come.

He said JP Morgan expected the jobless rate to climb over six per cent by mid-2014.

"If you look at economic growth, we're currently running below trend and as a consequence of that, there's more slack in the economy and employment opportunities are drying up," Mr Kennedy said.

"A big part of that is that we are seeing the investment phase of the resources boom starting to peak."

He said the level of capital expenditure is likely to decline and growth should be a little lower as a result.

"That's all feeding through to a pretty weak economic backdrop that's going to force our jobless rate slightly higher," Mr Kennedy said.

Invast Securities chief market analyst Peter Esho said the fall in total employment was not a huge surprise even though a rise was predicted.

"The jobs market might be somewhat distorted by a long election campaign period so some will be cautious to see how this is backed up," he said.

"The RBA has been working hard at cushioning the economic slowdown and jobs have been front and centre to that thought process with inflation taking a back seat."

Mr Esho added he thinks the central bank's current cycle of cutting the cash rate may be coming to an end.

NAB senior economist David de Garis said two consecutive months of falling employment is a sign the labour market is soft.

"It is something of a reality check after the better consumer and business confidence readings over the past couple of days," he said.

"It would be wrong to infer that it was just hesitation ahead of the election.

"We have seen this trend emerge for a few months now, it's not inconsistent with the slowdown in the economy and the slowdown in the resource investment for the past year or so."