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Australian Employment Gains 10,500; Jobless Rate 4.5% (Update5)
By Hans van Leeuwen and Gemma Daley
April 12 (Bloomberg) -- Australian employment climbed in March and the jobless rate fell to a 31-year low as builders and retailers hired more workers, raising expectations the central bank may raise interest rates as soon as next month.
Employers hired an extra 10,500 staff after adding a revised 23,200 in February. The jobless rate dropped to 4.5 percent from 4.6 percent, the Bureau of Statistics said today in Sydney. The median estimate of 22 economists in a Bloomberg News survey was for 15,000 new jobs and an unchanged unemployment rate.
A worker shortage is driving up wages and consumer spending, underpinning an economic expansion now in its 16th year. Futures and currency traders have bet the Reserve Bank of Australia may soon raise interest rates after it warned last month inflation is likely to be ``too high'' this year.
``The Reserve Bank's concerns about wages growth putting upward pressure on inflation are justified,'' said Jarrod Kerr, an economist at JPMorgan Chase & Co. in Sydney. ``It's a very resilient, very tight labor market.''
The Australian dollar rose to as high as 82.73 U.S. from 82.45 cents immediately before the report. It traded at 82.56 cents at 1:29 p.m. in Sydney. The yield on the benchmark 10-year government bond rose 1 basis point, or 0.01 percentage point, to 5.93 percent.
The number of full-time jobs rose 31,200 in March, today's report showed, and part-time employment dropped 21,200. About 10.4 million of Australia's 20.8 million people are employed, and the economy has created 276,600 new jobs in the past 12 months.
Interest Rates
The Reserve Bank raised its benchmark interest rate three times last year after annual inflation breached its target range of between 2 percent and 3 percent for three straight quarters. The overnight cash rate target is at a six-year-high 6.25 percent.
A Credit Suisse index of futures contracts at 1:30 p.m. in Sydney put the probability of a May interest-rate increase at 63 percent.
The Australian dollar has risen 5 percent against the U.S. currency in the past month as traders bet the Reserve Bank will increase the gap between its benchmark rate and that in the U.S., which has been 5.25 percent for almost a year.
Inflation ``is more likely to be too high than too low in the period we can foresee,'' Reserve Bank Assistant Governor Malcolm Edey said in a speech last month.
Annual inflation was 3.3 percent in the fourth quarter. The Reserve Bank forecasts the so-called underlying inflation rate, which strips out volatile price movements, will be 2.75 percent this year from 2.9 percent at the end of 2006.
Economic Growth
The International Monetary Fund today forecast a 2.8 percent Australian inflation rate for 2007, rising to 2.9 percent next year, and said interest rates may need to rise.
``The Reserve Bank will raise rates in May. It needs to put the brakes on the economy and inflation is drifting upward,'' said Chris Mentis, chief financial officer at Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer.
The jobless rate is the lowest since May 1976, forcing miners and builders to boost pay as they seek to attract scarce staff for their expansion projects aimed at meeting surging Asian demand and commodity prices.
Mining investment soared 57 percent in 2006 from a year earlier. Wages rose a record 1.1 percent in the fourth quarter from the previous three months.
Higher costs have forced some producers, including Alcan Inc. and BHP Billiton Ltd., to delay projects.
Worker Shortage
Accelerating wages are no longer confined to mining and construction, according to UBS Australia Ltd., which said in a report this month that the problem is extending into businesses such as shops and cafes.
``The more options people have to get a job, the harder it gets to find people,'' said Richard Uechtritz, chief executive officer of JB Hi-Fi Ltd. in Sydney. JB Hi-Fi is opening 13 new stores in the year to June 30 and ``a similar number'' in the next fiscal year, taking the total to 87.
The jobs growth sent consumer confidence to a 19-month high last month, according to Westpac Banking Corp. and the Melbourne Institute.
Consumer spending drove the fastest pace of economic growth in a year. The economy grew 1 percent in the three months ended Dec. 31 from the previous three months.
Since then, retail sales rose twice as much as expected in February and home-building approvals had their biggest monthly gain in more than three years, the government reported this month.
The hiring boom may continue, with newspaper and Internet job vacancies climbing 1.9 percent to a record in March from February, according to Australia & New Zealand Banking Group Ltd.
Australia's participation rate, which measures the labor force as a percentage of the population aged over 15, fell 0.1 percentage point to 64.8 percent in March.
To contact the reporter on this story: Hans van Leeuwen in Sydney at [email protected] .
By Hans van Leeuwen and Gemma Daley
April 12 (Bloomberg) -- Australian employment climbed in March and the jobless rate fell to a 31-year low as builders and retailers hired more workers, raising expectations the central bank may raise interest rates as soon as next month.
Employers hired an extra 10,500 staff after adding a revised 23,200 in February. The jobless rate dropped to 4.5 percent from 4.6 percent, the Bureau of Statistics said today in Sydney. The median estimate of 22 economists in a Bloomberg News survey was for 15,000 new jobs and an unchanged unemployment rate.
A worker shortage is driving up wages and consumer spending, underpinning an economic expansion now in its 16th year. Futures and currency traders have bet the Reserve Bank of Australia may soon raise interest rates after it warned last month inflation is likely to be ``too high'' this year.
``The Reserve Bank's concerns about wages growth putting upward pressure on inflation are justified,'' said Jarrod Kerr, an economist at JPMorgan Chase & Co. in Sydney. ``It's a very resilient, very tight labor market.''
The Australian dollar rose to as high as 82.73 U.S. from 82.45 cents immediately before the report. It traded at 82.56 cents at 1:29 p.m. in Sydney. The yield on the benchmark 10-year government bond rose 1 basis point, or 0.01 percentage point, to 5.93 percent.
The number of full-time jobs rose 31,200 in March, today's report showed, and part-time employment dropped 21,200. About 10.4 million of Australia's 20.8 million people are employed, and the economy has created 276,600 new jobs in the past 12 months.
Interest Rates
The Reserve Bank raised its benchmark interest rate three times last year after annual inflation breached its target range of between 2 percent and 3 percent for three straight quarters. The overnight cash rate target is at a six-year-high 6.25 percent.
A Credit Suisse index of futures contracts at 1:30 p.m. in Sydney put the probability of a May interest-rate increase at 63 percent.
The Australian dollar has risen 5 percent against the U.S. currency in the past month as traders bet the Reserve Bank will increase the gap between its benchmark rate and that in the U.S., which has been 5.25 percent for almost a year.
Inflation ``is more likely to be too high than too low in the period we can foresee,'' Reserve Bank Assistant Governor Malcolm Edey said in a speech last month.
Annual inflation was 3.3 percent in the fourth quarter. The Reserve Bank forecasts the so-called underlying inflation rate, which strips out volatile price movements, will be 2.75 percent this year from 2.9 percent at the end of 2006.
Economic Growth
The International Monetary Fund today forecast a 2.8 percent Australian inflation rate for 2007, rising to 2.9 percent next year, and said interest rates may need to rise.
``The Reserve Bank will raise rates in May. It needs to put the brakes on the economy and inflation is drifting upward,'' said Chris Mentis, chief financial officer at Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer.
The jobless rate is the lowest since May 1976, forcing miners and builders to boost pay as they seek to attract scarce staff for their expansion projects aimed at meeting surging Asian demand and commodity prices.
Mining investment soared 57 percent in 2006 from a year earlier. Wages rose a record 1.1 percent in the fourth quarter from the previous three months.
Higher costs have forced some producers, including Alcan Inc. and BHP Billiton Ltd., to delay projects.
Worker Shortage
Accelerating wages are no longer confined to mining and construction, according to UBS Australia Ltd., which said in a report this month that the problem is extending into businesses such as shops and cafes.
``The more options people have to get a job, the harder it gets to find people,'' said Richard Uechtritz, chief executive officer of JB Hi-Fi Ltd. in Sydney. JB Hi-Fi is opening 13 new stores in the year to June 30 and ``a similar number'' in the next fiscal year, taking the total to 87.
The jobs growth sent consumer confidence to a 19-month high last month, according to Westpac Banking Corp. and the Melbourne Institute.
Consumer spending drove the fastest pace of economic growth in a year. The economy grew 1 percent in the three months ended Dec. 31 from the previous three months.
Since then, retail sales rose twice as much as expected in February and home-building approvals had their biggest monthly gain in more than three years, the government reported this month.
The hiring boom may continue, with newspaper and Internet job vacancies climbing 1.9 percent to a record in March from February, according to Australia & New Zealand Banking Group Ltd.
Australia's participation rate, which measures the labor force as a percentage of the population aged over 15, fell 0.1 percentage point to 64.8 percent in March.
To contact the reporter on this story: Hans van Leeuwen in Sydney at [email protected] .
