SYDNEY: The biggest three-month surge in Australian employment in three years is increasing pressure on central bank Governor Glenn Stevens to resume an unprecedented round of interest-rate increases early next year.
Employers added 99,500 workers in the three months to November 30, the most since the third quarter of 2006, pushing down the jobless rate to 5.7 per cent and confounding the median forecast of 22 economists surveyed by Bloomberg for a 5.9 per cent rate.
Australian unemployment has peaked and will fall as mining firms take on workers to increase iron-ore production amid a surge in China's demand for steel. The jobs surge also adds to global evidence of an economic rebound from the deepest recession since World War II.
"Australia has lived up to its reputation as the wonder from Down Under" and is the "strongest economy in the developed world", said Craig James, a senior economist at Commonwealth Bank of Australia. "The Reserve Bank will continue to lift rates over 2010."
Investors say there is a 76 per cent chance of a quarter-point increase in the benchmark lending rate to 4 per cent at the central bank's next meeting on February 2, according to Bloomberg calculations based on the Sydney Futures Exchange.
Stevens boosted the overnight cash rate target by a quarter-percentage point on December 1 to 3.75 per cent, the only policymaker in the world to raise borrowing costs three times since the height of the financial crisis.
He also increased the rate last month and in October, citing a rebound in business confidence and demand for iron ore that will boost gross domestic growth above 3 per cent next year in Australia, one of few economies, including China and India, to skirt the global recession.
Stevens has been clear "that interest rates won't stay at emergency levels forever", Deputy Prime Minister Julia Gillard said yesterday.
The number of fulltime jobs in Australia rose 30,800 in November and part-time employment increased 300, the latest report showed.
"The labour market is now in a fully fledged recovery," said Felicity Emmett, a senior economist at RBS Group Australia in Sydney. "It seems increasingly likely that the jobless rate has peaked below 6 per cent."
Advertisements for job vacancies jumped in November by the most since May 2007, a survey by ANZ Banking Group showed this week.
Rising consumer demand after Prime Minister Kevin Rudd's Government distributed more than A$20 billion ($25.2 billion) to households is also prompting airlines and retailers to boost hiring.
- BLOOMBERG
Jobs surge puts heat on interest
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