Unemployment rises to 5.7%, shares up after US Fed comments: Midday roundup

The unemployment rate in June ticked up to 5.7% from 5.5% the month before, according to figures released this morning by the Australian Bureau of Statistics.

This is slightly higher than had been expected, with an AAP survey of 14 economists having tipped a 0.1% rise to 5.6%.

The economy added 14,800 new part-time positions in June, but lost 4,400 full-time jobs. The participation rate (those in jobs or currently looking for employment) rose to 65.3% from 65.2%, suggesting some of the increase in unemployment could be due to more people actively looking for jobs than during the previous month.

On Monday, an ANZ monthly survey of job advertisements found they had fallen for the fourth consecutive month during June, adding a 1.8% fall to the 2.5% fall in May. Job advertisements are 19% below the level they were at a year ago.

Unemployment is one of the key measures looked at by the RBA when it decides whether to cut official rates.

Just before the unemployment figures were released, Westpac senior economist Justin Smirk said the pressure remains on the RBA to cut rates further in its August meeting.

“The fact that inflationary expectations remain well anchored suggests they have ample scope to do so should they decide it is necessary,” he said.

Stocks up after positive comments from Fed chair

The Australian sharemarket was up 1.03% at 10.20 this morning, after the minutes of the latest United States Fed meeting reassured American markets overnight..

The benchmark S&P/ASX200 index rose 49.9 points or 1% to 4,951.3 at 12.00 AEST, while in the United States the Dow Jones Industrial average fell 8.7 points or 0.1% to 15,291.

“Bernanke’s statements following the release of the minutes provided confidence after he reassured that the Fed won’t automatically increase interest rates after the unemployment target rate is reached,” says Miguel Audencial, a sales trader at CMC Markets.

“The reaction of the market was positive with the US stock futures rising after hours. I would expect this boost to flow through the Australian and other Asian markets today as well,”

Leading the gains were energy traders, buoyed by strong gains in the price of crude oil overnight.

Hiring managers budget for 3-5% salary increase as unemployment rate edges up

Three in four (74%) hiring managers are bracing for annual salary increases of 3-5%, according to a survey of 1,800 Australian hiring managers released yesterday by recruitment consultancy Michael Page.

The survey also found salary concerns to be the leading reason for employees leaving a business, according to 30% of those surveyed. Another 28% nominated gaining more experience as the key reason employees jumped ship, while 13% said employees left for better promotion opportunities.

For the year to February 28, salaries rose 3.5%, according to data collected by Hays Group. This is above the inflation rate, which for the year to the end of February stood at 2.5%.

“Unemployment is still comparatively low and some sectors and job functions continue to have skill shortages,” Hays Group noted in its report, adding that this put talented employees in a good position to negotiate.