SYDNEY, June 12 (AFP): A sharp fall in employment in Australia showed that a series of interest rate rises and slower global growth were having an effect on the economy, Deputy Prime Minister Julia Gillard said today.
Employment fell by a seasonally adjusted 19,700 jobs in May from April, the Australian Bureau of Statistics said earlier.
This was much weaker than economists' expectations of a 13,500 increase and the first monthly drop since October 2006. The unemployment rate was 4.3 per cent, higher than the consensus expectation of 4.2 per cent.
"Today's fall in employment is a sober reminder of the consequence of eight interest rate rises in a little over three years and slower global economic growth," said Gillard, who is also minister for employment.
The central bank's official interest rate stands at a 12-year high of 7.25 per cent.
"Today's data reinforces the challenges we face, to get the long-term fundamentals right so we can sustain jobs into the future, while keeping inflation in check," Gillard said in a statement.
The centre-left Labor government led by Kevin Rudd blames the former conservative government, ousted in elections last November, for allowing inflation to rise.
"The Rudd Labour government won't make the same mistake our predecessors made-to celebrate low unemployment but do little to sustain it into the future," Gillard said.
The employment data suggested that the central bank, the Reserve Bank of Australia (RBA), would leave rates on hold for the moment, economists said.
"While we doubt if the RBA will interpret today's data literally, continued signs of moderation in borrowing, spending and confidence coupled with softer leads for employment should keep it sidelined," Su-Lin Ong, senior economist at RBC Capital Markets, told Dow Jones Newswires.
"The labor market is still very tight and the RBA will still be on the look out for wage pressures," said JPMorgan economist Helen Kevans.
"We've got to look for signs whether this is sustained, we could see employment growth pick up again next month," she said.
