Australian Dollar Tumbles as April Jobs Report Disappoints
The Australian Dollar dropped aggressively lower, down as much as a full percentage point on average against its major counterparts, after a report showed that employment unexpectedly shrank in April. Traders interpreted the release as negative for the prospect of future RBA interest rate hikes, with a Credit Suisse gauge tracking tightening expectations over the next 12 months dropping 8 basis points to the lowest in a week.
The economy lost 22.1K jobs, marking the largest drop in nearly two years. Worse still, the drop was driven by a 49.1K drop in full-time employment, the biggest monthly decline since the 52.2K drawdown recorded in February 2009 just in the aftermath of the global credit crunch and subsequent recession of 2008. The unemployment rate held steady at 4.9 percent.
Curiously, the ranks of the unemployment actually shrank in April, down to 583K from 593K in the previous month. The apparent inconsistency appears to be accounted for by a drop in the labor force participation rate, which ticked lower to 65.6 percent to mark the lowest reading in seven months. Workers not actively looking for a job are not counted as being part of the labor force and so are not considered “unemployed”.
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