AUSTRALIA’S unemployment rate has risen to the highest level

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AUSTRALIA’S unemployment rate has risen to the highest level in more than 12 years, as the ranks of the unemployed swell to almost 800,000 for the first time since 1994, putting another interest rate cut firmly on the agenda.

The Australian dollar shed more than half a US cent to US76.55c immediately after the data became public at 11:30am (AEDT).

The Australian Bureau of Statistics revealed the country’s jobless rate had jumped from 6.1 per cent to 6.4 per cent between December and January, giving Australia the second highest unemployment rate in the English speaking world.

The surprise rise in the jobless rate follows a more optimistic set of number in the final three months of 2014, which witnessed an extra 100,000 jobs, and will boost the probability of a further interest rate cut by the Reserve Bank when it considers their level early next month.

Market expectations of an official rate cut in March rose above 60 per cent, from below 50 per cent, after the figures were released.

A fall in full-time jobs of more than 28,000 was partly offset by a smaller rise in part-time work between December and January, leaving total employment 12,200 lower across Australia at 11.67 million.

Economists had expected an overall fall of 5000.

The participation rate — the share of working page Australians in or looking for work — remained steady at 64.8 per cent.

It will be disappointing news for the Abbott government, which will need employment to grow by an average of more than 18,000 a month to meet its promise to oversee 1 million new jobs by 2018.

The unemployment was last as high as 6.4 per cent in August, 2002. The unemployment rate in the UK is 5.9 per cent, 5.7 per cent in the US, and 5.6 per cent in New Zealand. It is 6.6 per cent in Canada.

Among the 795,000 people who were unemployed in January, more than 550,000 are looking for full-time work.

The Reserve Bank cut official interest rates to an new record low of 2.25 per cent earlier this month, in part because of concerns the unemployment rate would stay higher for longer than it had expected.

In December 1994 the number of unemployed fell below 800,000 as the economy emerged from the early 1990s recession.

The ABS said the last time the unemployment rate rose by 0.3 percentage points or more was in September 2012, although on average an increase of this magnitude occurs once every 12 months.

The figures were not affected by recent changes in the ABS employment survey, although usual volatility could have contributed to the increase in the jobless rate, the ABS said.


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