Unemployment jumps to 5.7% as the economy sheds 35,000 jobs

Australia’s unemployment rate has jumped 0.5% to 5.7% in March after total employment fell by 34,700 to 10,771,800.

Most economists had expected employment to fall by 20,000 to 30,000, and had tipped the unemployment rate to rise to around 5.4%. The unemployment rate is now at the highest point in six years.

Today’s figures show the economy is slowing at a rapid rate, and vindicates the Reserve Bank’s decision to cut rates by 0.25% to 3% on Tuesday.

Full-time employment decreased by 38,900 to 7,621,300 during March, while part-time employment increased by just 4200 to 3,150,500.

Total unemployment increased by 52,900 to 650,900, The number of people looking for full-time work increased by 28,500 to 460,400, while the number looking for part-time work increased by 24,300 to 190,500.

”The rise in the unemployment is remarkable,” JP Morgan economist Helen Kevans told The Age. ”It’s the highest since 2003 and a sign of things to come.”

The participation rate – which measures those in work and those looking for work – was steady at 65.5%, suprising some economists who expected it to fall slightly.

“It appears that households may be trying to repair their balance sheets and restore some lost wealth with second-income earners re-entering the labour market,” ANZ economist Riki Polygenis says. “Indeed the female participation rate has increased by 0.6 percentag points in the past six months to 59.0%, while male participation has fallen by 0.3 percentage points to 72.2%.

Westpac chief economist Bill Evans is not expecting an immediate response from the Reserve Bank to the poor unemployment figures. 

“The level of job loss is probably in line with their own forecasts and as a result we expect that they will hold the line next month both because of the need to assess the impact of previous stimulatory policies; assess the budget; and always being mindful of the limited flexibility which the Bank has in reserve. We retain our long held view that the low point in this cash rate cycle will be 2% but it will not be reached until the final quarter of 2009.”