Australian employers sacked the most people in nine months in December, a surprise blow for the economy that some analysts say could revive expectations for a central bank rate cut.
The Australian Bureau of Statistics reported that the number of people employed decreased by 22,600 in December, well below consensus expectations for a 7,500 increase. The news sent the Aussie dollar tumbling to $0.8805 early Thursday, its lowest level since August 2010.
Analysts told CNBC the jobs shocker could lead those who had forecast the nation's central bank to start hiking rates next year to revise their forecasts.
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"Overall, economists have been bearish on the Australian economy for a while, so it's not a massive secret, especially given recent spending cuts by the government, and the fact that companies are wary of what direction the economy will take," said Stan Shamu, market strategist at trading firm IG, referring to the decline in jobs.
"We could see some analysts that have been forecasting rate hikes for next year revising their forecasts, this could be a talking point," he added.
Pedestrians on Campbell Parade, BondiOliver Strewe | Lonely Planet Images | Getty Images
The Reserve Bank of Australia cut interest rates to a record low of 2.5 percent in August in an attempt to revive the country's flagging economy which has suffered from the impact of the end of its mining boom, slower growth in China, its largest trading partner, and stubborn strength in its domestic currency at the start of last year.
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More recently, weakness in the Aussie pushed back rate cut expectations as the central bank made it clear that they would prefer to stimulate the economy through a weaker Aussie, rather than further easing. Furthermore, many think central bankers will be reluctant to lower rates again due to fear of further heating up its frothy property market.
But IG's Shamu told CNBC that Thursday's disappointing jobs number could shake the RBA.
"If jobs continue to fall, and that impacts other parts of the economy, the RBA, whose mandate is to keep the economy stable, might start to ramp things up. People could be wondering if this is the trigger [for a rate cut,]" he said.
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However, Shamu noted, that the RBA was likely to wait to for the next data point before making any rash decisions, given that December jobs data is often seasonally affected, much like it is in the U.S.
