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Soaring jobless numbers and a raft of soft economic data have forced Joe Hockey to rethink the severity of his first budget with the Treasurer declaring it will now be ''focused on growth''.
The declaration represents a marked change in tone emanating from Canberra after Mr Hockey had consistently signalled a tough budget to drive it back to the black.
Rocked by an unexpectedly steep deterioration in the jobless rate to 6 per cent - the highest rate in a decade - the federal government is grappling with a worsening economic picture, as companies shed jobs, factories close, and economists warn of worse to come.
With the opposition claiming he had presided over 63,000 job losses - equal to one position lost every three minutes - Prime Minister Tony Abbott said he very much regretted that unemployment was ''edging up''.
He called on Labor to scrap the mining and carbon taxes and restore the building industry watchdog in order to get growth going.
January jobs figures released by the Australian Bureau of Statistics jumped from 5.8 per cent to 6 per cent with the number of full-time jobs across the nation falling by 3700 despite population growth.
Economists had been tipping the number to increase by as many as 15,000 positions.
The bad news came as the government struggles to explain its softly-softly approach to Toyota after the Japanese-owned car maker caught it off-guard on Monday announcing plans to follow Ford and Holden out the door.
About 1300 mining services workers in Western Australia at the Forge Group were also retrenched on Wednesday as receivers salvage that company's value in a restructure.
The softening outlook is being fuelled by flat public sector demand, low activity in the non-mining sector, and soft domestic demand in the part of the economy not associated with either exports or imports.
NAB chief economist Alan Oster said the jobless rate would get worse, reaching 6.5 per cent this year even though below-trend growth at 3 per cent was not ordinarily a serious problem.
He said GDP growth was being held up by exports such as coal and LNG, but in the domestic economy, activity was flat, requiring governments to step in with infrastructure spending to ''fill the hole''.
Mr Hockey bristled at the suggestion that he was contemplating a ''stimulatory'' budget, but in other comments, he also warned against the inevitability of the jobless rate reaching 6.25 per cent later this year, because such predictions were based on ''current settings''.
Both the previous Labor government in its last budget, and the International Monetary Fund in an assessment released overnight on Wednesday, predicted the jobless rate would keep climbing to 6.25 per cent this year.
''That's the IMF's analysis on the basis of current settings,'' he said. ''Current settings, which says that the peak's going to be 6.25 per cent, which was the same level of unemployment forecast by the previous Labor government.
''We're no different on that forecast of unemployment. That's why we have to change things.''
But asked if that meant the budget would be configured to stimulate jobs growth, Mr Hockey said no.
The story Joe Hockey feels sting of shock rise in jobless figures first appeared on The Sydney Morning Herald.