Unemployment rate falls to 5.7pc in July

The dollar jumped past US77c after a surprise fall in unemployment to 5.7pc, driven by a surge in part-time jobs.

The number of part-time positions jumped by 71,600 in July.

The Australian dollar has surged past US77c as traders analysed a surprise decline in the jobless rate for July that was driven by a stunning surge in part-time jobs.

The Australian Bureau of Statistics said the unemployment rate fell from 5.8 per cent to 5.7 per cent as 26,200 jobs were added through July, the highest increase since November.

The seasonally-adjusted numbers comfortably topped expectations for a steady unemployment rate and a moderate lift in jobs of 10,000.

However, the breakdown of the data was not as pleasing as the headline numbers would suggest, as the jobs gain came thanks to a remarkable 71,600 jump in part-time positions.

The part-time jobs growth offset a 45,400 drop in fulltime jobs, reverting to a recent trend that has seen part-time employment growth comfortably outpace fulltime jobs.

The trend was put on hold last month as part-time jobs weakened by around 30,000 and fulltime jobs surged over 38,000, but that turnaround has been swiftly cut short.

It leaves part-time employment up by 101,200 persons since the start of the year, while fulltime employment has fallen by 19,900.

Meanwhile, the participation rate held steady at 64.9 per cent, in line with expectations.

“July’s labour market figures were much better than expected and forward looking indicators suggest the labour market should continue to remain healthy,” Capital Economics assistant economist Kate Hickie said.

“However, given that part-time positions accounted for all of the new jobs created in July there is probably still a decent amount of spare capacity in the labour market, which means that wage growth is likely to remain subdued.”

Ms Hickie added the numbers were also likely boosted by part-time hires for the government’s Census.

Employment Minister Michaelia Cash said the youth unemployment figure remained “unacceptably high” and the government would do “everything in our power” to make young people more attractive to companies.

“You have a government that recognises that governments don’t create jobs; employers do,” she told reporters in Perth.

Senator Cash cautioned against “demonising” part-time employment which she said was often chosen by students, older workers, carers and people seeking work-life balance.

“I am not going to demonise part-time employment; I am going to support it and applaud it because it does represent a good choice for so many people,” she said.

On a state-by-state basis, Tasmania was the only one to record a decline in jobs for the month, with Queensland’s 12,300 increase outpacing all-comers.

Despite the fall in jobs Tasmania saw its unemployment rate dip 0.3 percentage points as labour force participation fell in the state.

The largest improvement in this metric was recorded in South Australia, as its jobless rate dipped 0.6 per cent points to 6.4 per cent. It remains the highest in the country, however.

Queensland’s unemployment rate improved 0.3 percentage points, while New South Wales retained a countrywide low rate after recording a 0.1 percentage point dip to 5.2 per cent.

Victoria — up 0.2 percentage points — and Western Australia — up 0.6 percentage points — were the only two states to note a lift in the jobless rate, with the latter’s rise pinned on a jump in the participation rate.

At 12.15pm (AEST), the Australian dollar bounded to US77.1c, up from US76.55c ahead of the release.

Meanwhile, a key measure of wages rose 2.2 per cent over the year to May.

The increase took average weekly ordinary time earnings (AWOTE) for adult full- time workers to $1,516, according to estimates published by the Australian Bureau of Statistics.

AWOTE in May was $1,353.70 for women and $1,613.50 for men, the seasonally adjusted figures show.

The annual rise was barely half the 4.2 per cent average for the prior 20 years. The figures confirmed an alternative measure of wages released yesterday, the wage price index, which remained at a record low annual growth rate of 2.1 per cent in the year to June.

Total earnings including overtime for full-time adult workers averaged $1575.90 - $1,371.30 for women and $1,696.70 for men, a difference of 24 per cent. The gap was only partially explained by a variation in hours worked in full time jobs, which the bureau defines as 35 hours or more per week. In May, female workers in full-time jobs clocked up just over 159 and a half hours while male full-time workers put in 9.7 per cent more, just over 175 hours.

With Jared Owens, AAP