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Rising jobless rate a challenge for new gover -

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ELEANOR HALL: In a sign that the strength of the economy looms as an early test for the incoming Coalition Government, Australia's unemployment rate has risen to 5.8 per cent.

While this is in line with expectations, economists warn that the number of Australians out of work will spiral over the next year.

Joining us now is business editor Peter Ryan. So Peter, what do these unemployment figures indicate about the strength of the economy?

PETER RYAN: Well, Eleanor, it's pretty clear from these figures that the jobs market remains under pressure according to the ABS, even though they have come in on expectations from economists.

We've seen 10,800 jobs disappear in August. That's beyond expectations for 10,000. 2,600 full-time jobs have also been wiped out, and this overall decrease in employment has been driven by a fall in part-time and casual jobs, and we've actually seen the reverse happen in previous readings where there's been growth in that part-time area. But this time around, both full-time and part-time jobs are being hit.

The participation rate has also fallen to 65 per cent from 65.1 per cent. So either more people are looking for work, or some perhaps have given up the hunt for work. And that's borne out in the underemployment rate for August, seasonally adjusted, which has risen to 7.8 per cent. So clearly this is an early economic test for the incoming Coalition Government.

ELEANOR HALL: And are some states being hit harder than others?

PETER RYAN: Yes, look, there have been some significant moves here that would be of interest to the individual states. NSW, for example: its jobless rate has moved up to 5.9 per cent from 5.7 per cent. Queensland also, up to 6 per cent from 5.9 per cent.

Western Australia has posted a bit of a surprisingly bigger increase, up to 5 per cent from 4.6 per cent. That's perhaps because of the transition that's underway in the mining sector. And Tasmania, which has been a big concern nationally, has an unemployment rate now of 8.3 per cent; that's just up a bit from 8.2 per cent.

But the only state to post a fall in the jobless rate is South Australia, but it still has quite a high state-based unemployment rate of 8.2 per cent.

ELEANOR HALL: So how tough is this as a test for the incoming Federal Coalition Government?

PETER RYAN: Well, the Coalition can neither take the blame nor take the credit for these figures. But clearly, as they campaigned on being prudent economic managers, what happens from here on in is really the responsibility of the incoming Treasurer, Joe Hockey.

And there are some fairly dire predictions about what might happen with the jobless rate. Treasury, for example, recently predicted that the jobless rate might peak at 6.25 per cent next year. But even some economic forecasters are starting to use figures like 6.4 or 6.5 per cent if that transition in the mining sector doesn't move as smoothly as expected.

But really, we now have a jobless rate of 5.8 per cent; and just to put that in context, it's back where it was at the height of the Global Financial Crisis back in mid-2009. So the highest point in around four years.

ELEANOR HALL: Peter Ryan, our business editor, thank you.