Australia Payrolls Rise 54,600, More Than Twice Estimates; Currency Jumps
Australian Employers Added 54,600 Workers in November
Ian Waldie/Bloomberg
Australian employers added 54,600 workers in November from the previous month, the statistics bureau said in Sydney today.
Australian employers added 54,600 workers in November from the previous month, the statistics bureau said in Sydney today. Photographer: Ian Waldie/Bloomberg
Employment in Australia jumped by the most in 10 months in November, driving up the nation’s currency and stocks as investors bet the economy will accelerate after slowing last quarter.
Payrolls gained 54,600 from October, the statistics bureau said in Sydney today, more than double the median forecast for a 20,000 increase in a Bloomberg survey of 26 economists. The jobless rate fell to 5.2 percent from 5.4 percent, even as more people entered the workforce.
A stronger labor market may help bolster consumer spending after the economy expanded at the weakest pace in almost two years in the third quarter. Reserve Bank of Australia Governor Glenn Stevens this week held the benchmark interest rate at 4.75 percent, citing little sign of inflation pressure, an outlook that may shift in 2011 should the pick-up in hiring persist.
“There is zero chance the RBA will hold steady until June next year,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “You simply don’t get record quarterly employment growth and a 5.2 percent unemployment rate when the economy is fragile or slowing.”
Investors are betting there is a 58 percent chance the central bank will raise rates by a quarter percentage point in May, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange.
Rising Dollar
The Australian dollar rose to 98.66 U.S. cents at 1:55 p.m. in Sydney, from 97.93 cents just before the release. Last month, the currency reached parity with its U.S. counterpart. The S&P/ASX 200 Index of shares advanced as much as 1 percent to 4,747.10, the highest level in about a month.
Today’s report showed the number of full-time jobs advanced 55,100 in November and part-time employment was little changed, slipping by 400. Australia’s participation rate, which measures the labor force as a percentage of the population over 15 years old, increased to 66.1 percent in November from 65.9 percent a month earlier, it showed.
The data are “consistent with a very tight labor market” and there is a risk unemployment will fall quickly through 5 percent, a level that in the past has seen accelerating wage pressure, said Stephen Roberts, a senior economist at Nomura Australia Ltd.
“The RBA will return to hiking the cash rate earlier than the market is currently allowing,” Roberts said, predicting a quarter point increase to 5 percent in March. The RBA’s next meeting on borrowing costs is scheduled for Feb. 1.
Resources Boom
Employment is escalating as energy and resources companies increase investment and hiring to meet demand from China.
Today’s report showed unemployment fell to 4.5 percent in Western Australia, site of Chevron Corp.’s A$43 billion ($42 billion) Gorgon liquefied natural gas project, and 5.5 percent in Queensland, where BG Group Plc will begin building a $15 billion LNG venture, generating 5,000 construction jobs.
BG, Chevron, Royal Dutch Shell Plc and ConocoPhillips are among energy companies investing about A$200 billion in proposed LNG projects in Australia.
The hiring surge threatens to boost inflation, which the central bank aims to keep in a range of 2 percent to 3 percent. The consumer price index in the third quarter rose 2.8 percent from a year earlier, a government report showed Oct. 27.
Labor Demand
In a statement earlier this week, Stevens said that “after the significant decline last year, growth in wages has picked up somewhat, as had been expected. Some further increase is likely over the coming year.”
The central bank has raised its overnight cash rate target seven times since October 2009, in contrast with the U.S. Federal Reserve’s policy of a benchmark rate near zero since December 2008. That divergence has contributed to a 10 percent increase in the local dollar versus the U.S. currency this year.
Assistant RBA Governor Philip Lowe, in a speech yesterday in Sydney, said policy makers’ most recent rate increase, on Nov. 2, was an “early and modest adjustment” aimed at avoiding “more substantial increase in interest rates later on.”
To contact the reporter for this story: Michael Heath in Sydney at mheath1@bloomberg.net
To contact the editor responsible for this story: Chris Anstey in Tokyo at canstey@bloomberg.net
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