Australia’s Job Growth Accelerates, Diminishing Economy’s Slack
By Jacob Greber
May 13 (Bloomberg) -- Australia’s job growth accelerated in April, propelled by full-time employment, indicating diminished slack in an economy fueled by resource shipments to China.
Employment rolls rose for the second straight month, by 33,700, exceeding the median estimate of 22,500 in a Bloomberg News survey, a statistics bureau report showed in Sydney today. The unemployment rate held at 5.4 percent. Jobs gains were led by Queensland, source of much of the coal shipments to China.
Australia’s dollar extended gains after the report signaled the central bank may need to keep raising interest rates even after it signaled a pause last week. Demand is pushing against the economy’s capacity, Assistant Governor Philip Lowe said today, adding that he’s “optimistic” about growth in China -- Australia’s biggest export destination.
“The Australian economy is looking very healthy and this puts the spotlight back onto the Reserve Bank of Australia about when and how far they’ll increase interest rates,” said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney.
The Australian currency gained 0.6 percent to 89.88 U.S. cents as of 12:27 p.m. in Sydney. The currency suffered its biggest weekly loss since January 2009 last week on concern Europe’s debt crisis will hamper the global economic recovery and crimp Australia’s exports.
Interest-rate futures indicate traders are betting the central bank is certain to raise the benchmark rate to 4.75 percent by December, from 4.5 percent now. The contracts show a 54 percent chance of a move by early September, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 10:07 a.m.
Leading G-20
Governor Glenn Stevens has led Group of 20 central bankers in boosting benchmark interest rates this year to stop a mining boom from stoking inflation as demand for skilled workers jumps at companies such as BHP Billiton Ltd. Low inflation has been “critical” to Australia’s economy, forecast to double its pace of growth by late 2012, Lowe said in a speech today in Sydney.
Stevens last week said lending costs are back to their “average” levels for most borrowers, stoking speculation policy makers will slow the pace of future increases in the benchmark rate. The bank’s moves since October also represent a “significant adjustment,” he said on May 4.
The number of full-time jobs gained 37,500 in April and part-time employment decreased 3,900, today’s report showed.
Stevens has increased the overnight cash rate target six times since early October as evidence mounts that Australia’s economy will strengthen this year after skirting the global recession in 2009. The moves have taken the Reserve Bank’s benchmark up from a half-century low of 3 percent.
Wage Pressure
Inflation is forecast to accelerate to the top of the central bank’s target range of 2 percent to 3 percent in 2012, partly because of “some pick-up in wage growth as the labor market tightens,” policy makers said in their quarterly monetary policy statement on May 7.
In contrast to Australia, the unemployment rate in the U.S. was 9.9 percent in April, and 10 percent in March among European Union countries, the highest rate since August 1998.
Australia’s participation rate, which measures the labor force as a percentage of the population aged over 15, was unchanged in April from a revised 65.2 percent in the previous month, today’s report showed.
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
Last Updated: May 12, 2010 23:03 EDT
