Australia's unemployment falls despite job losses

Australia's unemployment rate has fallen to 5.1 per cent, despite the loss of 8,800 jobs in August.

The Bureau of Statistics figures show unemployment eased from 5.2 per cent in July to 5.1 per cent last month, with full-time employment up by 600, but the number of part-time jobs falling 9,300.

Economist forecasts had centred on 5,000 jobs being created and unemployment rising to 5.3 per cent.

The Bureau of Statistics figures show the surprise fall in unemployment was driven by a drop in the proportion of people in work or looking for work, from 65.2 to 65 per cent.

A fall in the participation rate is often a sign that discouraged jobseekers have given up the search for work because they cannot find a job, even though they might still like to work.

"You could interpret this as saying that, because employment is so weak, people gave up looking, that they withdrew from the labour force," JP Morgan chief economist Stephen Walters told Reuters.

"On balance it's a pretty weak report, but not as weak as if the unemployment rate had gone up. It's a bit of a mixed bag."

In a further sign of labour market weakness, the number of hours worked across the Australian economy fell by 5.7 million to just under 1.619 billion in August.

The more stable trend unemployment figure, which smooths out monthly volatility, also showed a stagnating labour market with unemployment steady at 5.2 per cent.

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