Australian jobless rate hits 5.4 percent

Australia's unemployment rate jumped to 5.4 percent in December, according to the latest official data, with a net 5,500 jobs lost as the mining-powered economy slows and manufacturing struggles. The Australian Bureau of Statistics said on Thursday the seasonally-adjusted jobless rate increased 0.1 percentage points from an upwardly-revised 5.3 percent in November. Analysts said the scale of the losses was worse than forecast. "Generally the message is that the labour market, whilst it is okay, is softening and therefore unemployment is starting to go up," said Alan Oster, chief economist at the National Australia Bank. Building materials manufacturer Boral and resources company Santos were among major firms who announced significant numbers of sackings in December. Boral and Bluescope Steel laid off hundreds more workers this week as the strong Australian dollar squeezes local firms. Australia's manufacturing sector contracted for a 10th consecutive month in December due to weak global demand as China cools and Europe and the US grapple with debt. The domestic economy is also softening due to the China slowdown, clocking growth of just 0.5 percent in the three months to September, prompting the central bank to slash interest rates to a record low of 3.0 percent last month. The Australian dollar fell to US$1.0534 from US$1.0563 before the release of Thursday's data, which the market saw as increasing the chances of another rate cut. Canberra predicts unemployment to hit 5.5 percent this year and has warned that the boom in commodity prices that saw Australia weather the global financial crisis without going into recession was over. The Reserve Bank of Australia is more optimistic, forecasting that the mining investment boom will end sometime in 2013-14.