Australia's jobless rate unexpectedly rose on Thursday to 5.3 per cent, its highest level in almost a year, as the mining-powered economy showed signs of flagging.
The Australian Bureau of Statistics said unemployment jumped for a second straight month in August, exceeding the steady 5.1 percent expected by economists, who had tipped 11,000 jobs to be created.
On Thursday’s figures revealed 9,700 jobs had been lost.
It is the highest level since last October, when the jobless rate hit 5.4 per cent but employment growth was considered much stronger, with record workforce participation.
"The disappointing jobs report adds to the sense that the Australian economy is slowing," said West pac currency strategist Rob Rennie.
A number of major companies have announced job cuts in the past month, citing the strong Australian dollar and tough world markets, and analysts have tipped a steady increase in unemployment over coming months.
Canberra has forecast unemployment to fall to 4.5 per cent by mid-2013.
Renewed global turmoil due to US and European debt fears has seen consumer confidence slump in recent months, with retail sales falling sharply and the housing market also notably softer.
Australia's economy contracted in the first three months of 2011 due to unprecedented flooding and cyclones, which hit mining and agriculture exports.
Though it rebounded strongly to record 1.2 per cent growth in the three months to June, economists said the economy was losing momentum, due in part to high interest rates and the persistently high Aussie dollar hitting non-mining industries.
Jobs minister Chris Evans said the data reflected the dual-speed nature of Australia's economy, which has seen the mining industry and dollar boom at the expense of sectors including manufacturing and tourism.
"But the Australian fundamentals remain very strong," he said.
"The reality is we're dealing with those global factors, the loss of confidence in the international economy and the downturn internationally is having its impact on our trade-exposed sectors," added Evans.
The central bank held the official cash rate steady at 4.75 per cent again this month — unchanged since last November — but the weak jobs figures were seen as supporting a cut by year's end.
"The pace of deterioration in this would be of concern for the (bank)," said ANZ's Grant Turley.
"They can't still characterise the unemployment rate as unchanged. This will reinforce market pricing for rate cuts."
The Australian dollar plunged on the data, which also prompted a stock market sell-off.
The benchmark S&P/ASX closed marginally higher, up 4.6 points at 4,188.0, while the dollar was fetching $1.0590 in late trade, down from $1.0644 earlier. ICAP analyst Adam Carr said the jobs figures reflected potentially contagious anxiety amongst employers.
"The risk of us talking ourselves into a recession is very real," he said.
Australian flag carrier Qantas and Bluescope Steel, the nation's largest steelmaker by output, both announced sweeping job cuts last month which will show up in future data.
Bluescope said manufacturing was in "crisis" while Qantas is planning an Asia-focused shakeup of its international arm in response to soaring competition in the region, rocketing fuel prices and global uncertainty.