Jobs disappear in Australia

SYDNEY, Australia -- Australia's labor market weakened sharply in July, with full-time jobs falling by more than 79,000.

Official figures on Thursday showed that the strength in the rest of the economy is not reflected in employers' hiring intentions.

The fall in full-time employment was partly offset by a jump in part-time jobs. Overall, total employment dropped by 12,600.

The unemployment rate stayed at 6.9 percent for the third month in a row.

The only thing preventing a jump in the rate was a decline in the number of people looking for work, discouraged by the gloomy prospects.

Figures weaker than expected

The bond market rallied on the weaker than expected report. Analysts had forecast an increase of 2,500 new jobs.

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The jobless figures come after the Organization for Economic Cooperation and Development predicted the Australian economy would grow 2 percent this year and then accelerate to 3.5 to 4.0 percent next year.

It said the economy was already showing signs of recovery, but there were still some restructuring reforms needed.

The job market is not expected to pick up until later this year, as employers generally wait for firm signs of a pick-up in demand before hiring more workers.

"The job market is clearly suffering a backlog from the growth slowdown last year," said Commonwealth Bank chief research economist Michael Blythe.

More impact from full-time jobs

Analysts place more importance on full-time jobs because of their impact on household income and spending. The decline in July followed another 39,500 fall the month before.

Unemployment is expected to peak above seven percent in coming months, compared with its low point of 6.0 percent in September last year.

Reuters contributed to this report.