Australia Adds Workers as Unemployment Steady; Aussie Gains
Australian employers boosted payrolls in April, underscoring an improving economic outlook that prompted the central bank to adopt a neutral policy stance.
The number of people employed rose by 14,200 from a month earlier, the statistics bureau said in Sydney. That compares with the median estimate for an 8,800 increase in a Bloomberg survey of 24 economists. The jobless rate held at 5.8 percent.
Central bank Governor Glenn Stevens reduced the benchmark interest rate by 2.25 percentage points from late 2011 to August to a record-low 2.5 percent, and has signaled a period of steady borrowing costs. The jobs data and a stronger housing market indicate businesses are beginning to invest in an economy that policy makers predict will accelerate.
“Underlying labour market conditions have clearly improved in recent months,” said Justin Fabo, senior economist at Australia & New Zealand Banking Group Ltd. in Sydney. “Full-time jobs growth has improved markedly so far this year. Further, these indicators are consistent with the unemployment rate sitting around its current level, or possibly a little lower, in the near term.”
The Australian dollar rose to 93.63 U.S. cents at 12:36 p.m. in Sydney, from 93.32 cents before the data were released. Traders are pricing in little chance of a rate move this year, according to swaps data compiled by Bloomberg.
The Aussie extended gains after China’s exports and imports unexpectedly rose in April, helping leaders put a floor under a slowdown in the world’s second-biggest economy.
The number of full-time jobs advanced by 14,200 in April, while part-time employment was unchanged, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, dropped to 64.7 percent in April from a revised 64.8 percent a month earlier, it showed.
New South Wales and Queensland posted employment gains, while jobs were lost in the mining state of Western Australia.
The RBA this week left its benchmark interest rate unchanged at a record-low 2.5 percent as slowing inflation and anticipated cuts to government spending give policy makers room to support economic growth. It noted on May 6 “improvement in indicators for the labor market,” in one of few changes from last month’s statement. The central bank will release its revised economic forecasts tomorrow.
“While rate cuts are firmly off the agenda, it is unlikely that the Reserve Bank will shift away from its ‘interest rate stability’ rhetoric any time soon,” said Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia in Sydney. “A few more months of robust employment would be required.”
Loose monetary policy has boosted household spending, pushing up retail sales for 11 straight months. Coles supermarkets and Woolworths Ltd. are among companies hiring.
Home prices have also been spurred by record-low borrowing costs. The median house and apartment price in Australia’s eight biggest cities rose 11.5 percent in April from a year earlier, and Sydney led gains with a 16.7 percent increase, according to RP Data-Rismark home value index released May 1.
Underscoring the economy’s resilience, National Australia Bank Ltd. (NAB), the country’s largest lender by assets, today posted an 8.5 percent increase in first-half profit on higher mortgage lending and lower bad-debt charges.
“The transition from mining to other sectors is occurring,” Chief Executive Officer Cameron Clyne said at a media conference in Sydney today. “You simply don’t produce 5 percent unemployment for 6 straight years without the economy actually doing well.”
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