Unemployment to hit four-year high

The unemployment rate is expected to hit a four-year high as mining investment slows and the rest of the economy fails to pick up the slack.

Unemployment to hit four-year high

(AAP)

The jobless rate is expected to have hit a four-year high in July as the rate of hiring in the mining sector slows.

The Australian Bureau of Statistics (ABS) will release its monthly labour force figures on Thursday morning.

The median forecast from an AAP survey of 11 economists is for the unemployment rate to rise to 5.8 per cent, from 5.7 per cent in June.

Australia has not had an unemployment rate of 5.8 per cent since August 2009.

The number of people with jobs is expected to have risen by 10,000 in July, compared to a gain of 10,300 in June.

JP Morgan Australia chief economist Stephen Walters said employment growth is not keeping up with population growth and the expansion of the workforce.

"We forecast a 15,000 net gain in aggregate employment for last month, but a larger expansion of the labour force," MR Walters said.

"The jobless rate, then, has to rise."

Mr Walters said the non-mining sectors of the economy had not been contributing to employment growth.

"Firms have been trimming workers' hours, while achieving modest employment growth, much as they did in the period of subdued growth four years ago," he said.

"The fact that activity in the non-mining economy remains subdued, though, it means firms probably at some point also have to curb hiring further."

Mr Walters said he expects the unemployment rate to climb to six per cent by the end of the year.

The expected rise in the unemployment rate is backed up by the ANZ job ads survey, released on Tuesday.

The number of employment advertisements fell for the fifth consecutive month, down 1.1 per cent in July, seasonally adjusted.

Job ads were 18.6 per cent lower than at the same time a year ago.

ANZ chief economist Ivan Colhoun said employment growth in Australia was slowing as mining investment weakened and the rest of the economy failed to pick up the slack.

"The continuing trend decline in advertising is consistent, unfortunately, with a further modest rise in the unemployment rate over coming months," he said.

"Job advertising in Western Australia is now nearly 45 per cent below the levels of a year ago, consistent with weaker demand for labour in the mining sector."

The participation rate - the percentage of the working-age population either in work or looking for a job - is expected to be unchanged in July at 65.3 per cent.


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Source: AAP


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