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February 12, 2010

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Home » Business » Economy

Australia defies forecasts with fall in jobless rate

AUSTRALIA'S jobless rate unexpectedly fell to 5.3 percent in January, according to figures yesterday that the government said vindicated its stimulus spending.

Australian Bureau of Statistics figures showed that unemployment had dropped from 5.5 percent in December, surprising economists who had forecast a rise to 5.6 percent. The number of Australians in work rose 52,700 to almost 11 million, or half Australia's population.

Prime Minister Kevin Rudd said the new jobs were a "direct product" of government spending on infrastructure projects aimed at stimulating the economy.

"The government's objective is to keep the Australian economy strong by protecting jobs and supporting working families," Rudd told Parliament.

Australia narrowly avoided recession during the global economic crisis, recording only one quarter of contraction in the three months through December 2008.

Since late 2008, the government has rolled out a A$40 billion (US$37 billion) stimulus spending program, and the central bank slashed interest rates to try to protect the economy.

Continuing demand for raw materials from China and India has also helped the sluggish economy grow.

But opposition lawmakers argue that the government has paid too high a price to avoid recession by supplying every school with a new building and 2 million homes with free ceiling insulation.

In May last year, Treasury predicted that unemployment would peak at 8.5 percent in the 2010-11 fiscal year. But that forecast was scaled down in November to 6.75 percent by mid-2010.


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