2014.08.0703:55:14UTC+00Unemployment at highest in 12 years for Australia

The rate of joblessness for Australia has reached a 12 year high emphasizing the challenge its economy faces as it begins to move away from its dependence on mining.

Latest figures show that the unemployment rate climbed up to a seasonally adjusted 6.4% in the month of July from the 6% in June. The increase indicates the growing number of job seekers and the slightly declining number of job holders. The unemployment rate in the country is now higher than that of the US for the first in seven years with the jobless reaching 789,000. HSBC chief economist Paul Bloxham said that the worsening of the labor market is a surprise, most economists had expected little or no change, and may be attributed to the slowdown in the country’s economy in the second quarter after starting 2014 on a strong note.

According to the Australian Bureau of Statistics, an additional 43,400 people participated in the labor market by either holding or looking for a job last month while the number of employed people dropped by 300.

Mining investments had been the main driver of Australia’s economy for the past decade. It contributed to the rise of the Australian dollar against several major currencies and a pickup in wage growth. As investments in the sector and in natural fall, the government, led by Prime Minister Tony Abbott, is looking to strengthen the industries of construction, tourism, and agriculture to offset any losses and keep momentum going.

The Reserve Bank of Australia and the Australian Treasury had earlier warned of unemployment rising due to the smaller number of construction workers being taken in by fewer natural gas and mining projects. Glenn Levine from Moody’s Analytics says that, “There was never any reason to expect this transition to go smoothly.”