THE NEWS WRAP: Federal budget cuts could push unemployment rate higher

Federal government budget cuts could push Australia’s unemployment rate to a 10-year high, The Australian Financial Review reports economists warning.

Employment fell by 23,000 jobs in December while the unemployment rate remained at 5.8% as the participation rate fell.

“It certainly is a consideration about how aggressively the federal government can cut spending, given the softness we’re seeing in the labour market,” Macquarie Bank senior economist Brian Redican said.

Canadian dairy giant about to swallow up Warrnambool Cheese & Butter

Canadian diary giant Saputo is on the verge of taking over Australia’s Warrnambool Cheese & Butter after major shareholder and one-time bidder Bega Cheese accepted the company’s offer.

The Australian reports that it is widely anticipated that other major shareholders – Murray Goulburn and Lion – will also take Saputo’s offer.

Saputo’s Australian advisor, Rothschild managing director Sam Prentice said: “We’re obviously very pleased that Bega has announced it will sell into Saputo’s offer and expect many other shareholders will follow Bega’s lead.”

Yahoo! COO in surprise exit

Internet giant Yahoo! is parting ways with its chief operating officer in a sign its attempts to raise advertising sales may not be paying off.

The surprise departure of Henrique de Castro after just 15 months in the job is seen as a setback for CEO Marissa Mayer.

Yahoo! didn’t comment on the reasons for de Castro leaving, but speculation was strong that the company’s advertising revenues weren’t improving quickly enough.

A replacement for de Castro has not been named.

Markets

The Dow Jones Industrial Average is down 0.39% at 16,417.01 points and the Australian dollar is buying 88.2 US cents.