Australia’s Jobs Boom Gives RBA Green Light on Rates Australia’s Jobs Boom Gives RBA Green Light on Rates

Dec. 11 (Bloomberg) -- 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 Nov. 30, the most since the third quarter of 2006, pushing down the jobless rate to 5.7 percent and confounding the median forecast of 22 economists surveyed by Bloomberg for a 5.9 percent rate.

Australian unemployment has peaked and will fall as miners including BHP Billiton Ltd. take on more workers to increase iron-ore production amid a surge in China’s demand for steel, say economists. The jobs surge also adds to global evidence of an economic rebound from the deepest recession since World War II, including last month’s drop in the U.S. jobless rate.

“Australia has lived up to its reputation as the wonder from down under,” and is now the “strongest economy in the developed world,” said Craig James, a senior economist at Commonwealth Bank of Australia in Sydney. “The Reserve Bank will continue to lift rates over 2010.”

The Australian dollar traded at 91.66 U.S. cents at 10:07 a.m. in Sydney yesterday from 91.05 cents just before the report was released.

Rate Bets

Investors are betting there is a 76 percent chance of a quarter-point increase in the benchmark lending rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 10 a.m. It stood at 48 percent just before yesterday’s report. Rates are near zero in the U.S. and Japan.

Governor Stevens boosted the overnight cash rate target by a quarter-percentage point on Dec. 1 to 3.75 percent, becoming the only policy maker in the world to raise borrowing costs three times since the height of the global 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 percent 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 -- Australians understood that,” Deputy Prime Minister Julia Gillard told the Australian Broadcasting Corp. today.

Chevron Gas

Chevron Corp. said on Dec. 5 it has signed a deal with Japan’s Tokyo Electric Power Co. to supply liquefied natural gas from its Wheatstone venture in Western Australia. The project, estimated to be worth $82 billion, is forecast to generate 6,500 jobs during construction.

It is in addition to the $39 billion Chevron-led Gorgon gas venture, also in Western Australia, which is forecast to create another 10,000 jobs when construction starts early next year. Qantas Airways Ltd.’s low-cost carrier Jetstar is also taking on more workers.

The number of full-time jobs in Australia gained 30,800 in November and part-time employment increased 300, yesterday’s report showed. The median estimate of 22 economists surveyed by Bloomberg was for an increase of 5,000 jobs in November.

“The labor market is now in a fully fledged recovery,” said Felicity Emmett, a senior economist at RBS Group Australia Ltd. in Sydney. “It seems increasingly likely that the jobless rate has peaked below 6 percent.”

Advertisements for job vacancies jumped in November by the most since May 2007, a survey by Australia & New Zealand Banking Group Ltd. showed this week.

‘Back to Capacity’

The number of people employed gained 31,200 in November after rising 27,200 in October, yesterday’s report showed. Employers also added 41,100 workers in September.

The labor market in “the mining sector is pretty much back to capacity,” Governor Stevens told economists in Sydney on Dec. 8. “There are a lot of other countries in the world who would like to have that problem.”

Unemployment in the U.S. fell to 10 percent in November from 10.2 percent in October, which was the highest in 26 years. The jobless rate among European Union countries was 9.8 percent in October, the highest level in more than a decade, and 7.8 percent in the three months through September in the U.K.

“We suspect there is a strong element of catch-up in recent employment figures after Australian business confidence turned rapidly more positive around mid-year,” said Anthony Thompson, at Westpac Banking Corp., who added unemployment has peaked.

Cash Handouts

Sentiment among businesses surged last month to the highest level since May 2002, a survey by National Australia Bank Ltd. showed on Dec. 8.

Rising consumer demand after Prime Minister Kevin Rudd’s government distributed more than A$20 billion ($18 billion) in cash to households is also prompting airlines and retailers to boost hiring.

Jetstar plans to hire 300 workers as it adds 700,000 new seats to existing routes with four extra Airbus 320 planes, the Australian Financial Review said yesterday, citing Chief Executive Officer Bruce Buchanan.

Michael Luscombe, chief executive officer of Australia’s largest retailer, Woolworths Ltd., told Bloomberg in an Oct. 20 interview the company will hire another 6,000 workers.