Oz jobless rate hits new high

AUSTRALIA’S jobless rate rose to an eight-month high in July as hiring stalled, prompting Goldman Sachs & Partners Australia Pty to predict as many as two interest rate cuts this year.

Unemployment jumped to 5.1% in July from 4.9% a month earlier, the first increase since October, the statistics bureau said. The number of workers fell by 100 after a revised 18,200 gain in June. That compares with the median estimate for 10,000 additional jobs in a Bloomberg News survey.

Exporters and retailers such as David Jones are getting hurt by a currency that’s risen 14% in the past year, and by consumers who are saving more, prompting the Reserve Bank of Australia to keep its benchmark interest rate at 4.75% since November. Goldman Sachs predicted that pause will end next month and unemployment will rise above 5.25%.

“The shift in tone of the July employment report, in concert with the sharp deterioration in business and consumer surveys, is material new information for policy makers,” Goldman Sachs economists David Colosimo and Tim Toohey wrote in a report, predicting 25-point cuts each in September and November. A basis point is 0.25 percentage point.

The number of full-time jobs declined by 22,200 in July, and part-time employment rose by 22,100, the report showed. Australia’s participation rate, which measures the labour force as a percentage of the population over 15 years old, held at 65.6% in July, it showed.

David Jones, the nation’s second-biggest department store chain, reported second-half same-store sales declined 6.9%, with chief executive Paul Zahra saying “we are facing an extremely difficult trading environment.”

Investors are betting the central bank will cut rates by almost 125 basis points by December, interbank cash-rate futures show.

Economists surveyed by Bloomberg News on August 9 said RBA governor Glenn Stevens will keep borrowing costs at 4.75%.