Office workers wait for their orders at a coffee shop in Canberra, Australia. The number of full-time jobs rose by 14,300 in August, and part-time employment jumped by 106,700, today’s report showed.
Australian employers added a record number of jobs in August, underscoring the central bank’s reluctance to cutinterest rates further and sending the local currency higher.
The number of people employed increased by 121,000, led by a surge in part-time jobs, as the statistics bureau said a rotation in its survey group affected today’s figures. The jump in employment compares with the median estimate for a 15,000 increase in a Bloomberg News survey of 28 economists. The jobless rate fell to 6.1 percent from a 12-year high of 6.4 percent.
Domestic demand is being spurred by a pickup in housing after a two-year easing cycle saw the Reserve Bank of Australia cut its benchmark rate to a record-low 2.5 percent. The RBA has this year flagged a period of rates stability as it seeks to avoid a growth gap emerging due to falling mining investment.
The data were “much better than expected, and may reflect the official labor market figures catching up with most other indicators of labor demand, which have been painting a more positive picture,” Savita Singh and Riki Polygenis, economists at Australia & New Zealand Banking Group Ltd., said in a research report after the release. “That said, the magnitude of the employment increase also makes today’s figures somewhat difficult to interpret.”
The Australian dollar traded at 91.86 U.S. cents at 12:53 p.m. in Sydney, from 91.57 cents before the data was released. Traders are pricing in 10 basis points of increase to the central bank’s interest rate over the next 12 months, up from 5 basis points before the data, according to an index of swaps from Credit Suisse Group AG in Sydney today.
Survey Change
The number of full-time jobs rose by 14,300 in August, and part-time employment jumped by a record 106,700, today’s report showed. Australia’s participation rate, a measure of the labor forcein proportion to the population, rose to 65.2 percent in August from a revised 64.9 percent a month earlier, it showed.
The statistics bureau said that the increase in part-time employment was driven by factors including a change in the survey group. “The incoming rotation group reported a higher proportion of part-time employed persons than the rotation group it replaced, and contributed 47,000 to the increase in part-time employment,” the bureau said.
Australia’s employment increase in August is equivalent to a rise of about 1.3 million in U.S. payrolls after taking into account the different sizes of the two labor markets, according to Jarrod Kerr, a Sydney-based strategist at Commonwealth Bank of Australia.
Market ‘Skeptical’
“The market’s skeptical,” said Sean Keane, an Auckland-based analyst at Triple T Consulting and the former head of Asia-Pacific rates trading at Credit Suisse Group AG. “Had today’s headline number been 41,000 rather than 121,000 it’s quite likely that the market would’ve been more believing in its response, and that interest-rate markets would’ve sold off even harder.”
Domino’s Pizza Enterprises Ltd. (DMP), a Brisbane-based franchisee of the U.S. home-delivery chain, expects to make about 7,500 new hires over the next few years in its stores across Australia, Japan and Europe, with about a third of that number in the local market, Don Meij, chief executive officer, said in a Aug. 19 interview.
About 3,600 jobs will be in new stores and another 3,600 will be added to existing outlets to help handle new growth, he said. The chain is selling basic pizzas in Australia for A$4.95 ($4.55) each to entice consumers, he said.
Balanced Growth
“We look at the macro environment and run almost against it,” he said. “Whether it’s good times or downturns, people are going to eat breakfast, lunch and dinner every day.”
In a largely unchanged statement accompanying this month’s rates decision, RBA Governor Glenn Stevens said the local exchange rate “remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
“The bank’s assessment remains that the labor market has a degree of spare capacity and that it will probably be some time yet before unemployment declines consistently,” Stevens said in the statement.
Job gains were strongest in Australia’s eastern seaboard states, rising by 45,300 in New South Wales, the most populous, 26,500 in the northeastern state of Queensland and 26,100 in the traditional manufacturing hub of Victoria.
Consumer confidence fell this month as households remained concerned about the government’s budget, which includes spending cuts and a new tax on high-income earners.
Loose monetary policy has boosted the property market. House prices in the year through August jumped 16.2 percent in Sydney and 11.7 percent in Melbourne, according to an RP Data-CoreLogic Home Value Index.
To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net
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