Australian jobless rate hits 5.4% in December amid manufacturing slowdown

SYDNEY (AFP) - Australia's unemployment rate jumped to 5.4 per cent in December, data showed on Thursday, with a net 5,500 jobs lost as the mining-powered economy slows and manufacturing struggles.

The Australian Bureau of Statistics said the seasonally-adjusted jobless rate increased 0.1 percentage points from an upwardly-revised 5.3 per cent in November.

Analysts said the scale of the losses was worse than forecast.

"Generally the message is that the labour market, whilst it is okay, is softening and therefore unemployment is starting to go up," said Alan Oster, chief economist at the National Australia Bank.

Building materials manufacturer Boral and resources company Santos were among major firms who announced a significant number of sackings in December.

Boral and Bluescope Steel laid off hundreds more workers this week as the strong Australian dollar squeezes local firms.

Australia's manufacturing sector contracted for a 10th consecutive month in December due to weak global demand as China cools and Europe and the US grapple with debt.

The domestic economy is also softening due to the China slowdown, clocking growth of just 0.5 per cent in the three months to September, prompting the central bank to slash interest rates to a record low of 3 per cent last month.

Canberra predicts unemployment to hit 5.5 per cent this year and has warned that the boom in commodity prices that saw Australia weather the global financial crisis without going into recession was over.

The Reserve Bank of Australia is more optimistic, forecasting that the mining investment boom will end sometime in 2013-14.