Australian employers added the most jobs in more than two years last month as the central bank’s plan to spur growth with record-low interest rates bears fruit.
The number of people employed rose by 42,700, the biggest gain since March 2012 and almost three times the median estimate in a Bloomberg survey of 15,000, statistics bureau data showed in Sydney today. The unemployment rateclimbed to 6.3 percent, a 12-year high, as more people entered the labor force seeking work.
The job gains were highest in New SouthWales and Victoria, reflecting the re-emergence of a two-speed economy inAustralia led by the east coast, wherehouse prices are also booming. The Reserve Bank of Australia has kept its benchmark rate at 2.5 percent for 16 months as it seeks to foster a transition to domestic growth drivers from waning resource investment and soak up unemployed miners in the nation’s north and west.
“It is pretty clear that the transition in activity from mining to housing construction has been a case of so far so good,” Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia, said in a research note. “While rate hikes are off the near-term agenda, it is unlikely that the Reserve Bank will shift away from its ‘interest rate stability’ rhetoric any time soon.”
A minority of economists including those at National Australia Bank Ltd., Goldman Sachs Group Inc., Deutsche Bank AG and Westpac Banking Corp. predict RBA Governor Glenn Stevens will cut rates in 2015 as the price of iron ore, Australia’s biggest export, has almost halved this year.
The Australian dollar traded at 83.53 U.S. cents at 1:20 p.m. in Sydney, up from 83.43 before the data was released.
The number of full-time jobs rose by 1,800 in November, and part-time employment jumped by 40,800, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, rose to 64.7 percent in November from 64.6 percent a month earlier, it showed.
While “some forward indicators of employment have been firming” this year, the labor market has “a degree of spare capacity,” Stevens said in a statement accompanying the RBA’s announcement last week that rates were on hold. “It will probably be some time yet before unemployment declines consistently.”
Today’s report showed New South Wales added 19,600 jobs in November and Victoria 10,800. Queensland and Western Australia, two mining hubs, added just 900 and 4,700 respectively. In the past six months, New South Wales has added 35,700 jobs while Queensland lost 30,500, data compiled by Bloomberg show.
The stronger-than-forecast job hiring last month contrasts with data showing consumer confidence is at its weakest since August 2011, business sentiment is at a 16-month low and the economy grew just 0.3 percent last quarter, the slowest pace in 18 months and less than half the median forecast in a Bloomberg survey.
Traders are pricing in at least one reduction in the RBA rate in the next 12 months, according to a Credit Suisse Group AG index based on swaps. The rate-cut bets have spurred an almost 11 percent decline in the Australian dollar since the start of September.
While the currency has fallen, it has trailed the pace of commodity price declines, impeding the economy’s transition to domestic drivers of growth.
In the 11 months to date, 169,000 jobs have been created, compared with 64,000 jobs for the 2013 calendar year. Since 1978, Australia has added 152,000 jobs annually on average.
The data delivers “some encouragement for the RBA that the labor market is hanging in there and not fraying too much at the edges right now,” said David De Garis, a senior economist at National Australia. The fact that the growth was mostly in part-time jobs “does take away a little bit from the headline result.”