Australian Employers Add Most Jobs in Three Years

Feb. 11 (Bloomberg) -- Australian employers added the most workers in more than three years in January, sending the currency surging on speculation the central bank will resume its record round of interest-rate increases.

The number of people employed rose 52,700 from December, more than three times the 15,000 median estimate of 21 economists surveyed by Bloomberg News. The jobless rate fell to an 11-month low of 5.3 percent from 5.5 percent, the statistics bureau said in Sydney today.

The biggest hiring boom in five years is increasing pressure on Reserve Bank of Australia Governor Glenn Stevens to resume raising borrowing costs to prevent a surge in wages feeding inflation. Traders doubled bets the bank will raise the benchmark lending rate by a quarter point to 4 percent next month, adding to similar moves in December, November and October.

“It will concern the Reserve Bank that the unemployment rate has peaked at a very low rate,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “Imagine what’s going to happen later this year” to inflation and wages when a forecast surge in mining investment intensifies, she said.

The Australian dollar, which has jumped 36 percent in the last 12 months, rose to 88.57 U.S. cents at 12:48 p.m. in Sydney from 87.72 cents just before the report was released. The two- year government bond yield jumped 11 basis points to 4.28 percent. A basis point is 0.01 percentage point. The S&P/ASX 200 index of stocks rose 1 percent to 4556.3.

Demand for Energy

Today’s report reinforces the central bank’s prediction last week that Australia’s economic growth will accelerate this year as companies such as Chevron Corp. boost investment to meet rising global demand for energy.

Australian employers have added 194,600 jobs since August, the biggest five-month surge since they created 214,000 jobs between September 2004 and January 2005.

The nation’s unemployment rate has also tumbled from 5.8 percent in October, after Prime Minister Kevin Rudd’s government stoked the economy by distributing more than A$20 billion ($18 billion) in cash to consumers. Another A$22 billion is being spent on roads, railways and schools.

In contrast, the unemployment rate in the U.S. was 9.7 percent in January, and 10 percent in November among European Union countries, the highest rate in more than 11 years. New Zealand’s jobless rate climbed to 7.3 percent in the fourth quarter, the highest in more than 10 years, and Japan’s rate was 5.1 percent in December.

Stimulus Measures

The rebound in Australia’s economy, one of the few to skirt last year’s global recession, is being driven by a combination of the government’s stimulus package, Governor Stevens’ decision to slash interest rates to a half-century low of 3 percent in April last year, a stronger Australian dollar and the resilience of China, Treasury Secretary Ken Henry said today in Canberra.

Stevens unexpectedly kept the overnight cash rate target unchanged at 3.75 percent last week, saying information about the impact on the economy of quarter-point gains every month last quarter is still limited.

Today’s report “should be substantial evidence for policy makers that labor-market conditions are tighter than expected,” said Ben Dinte, an economist at Macquarie Group Ltd. in Sydney.

Increased Bets

Investors are betting there is a 100 percent chance of a quarter-point increase in the overnight cash rate target to 4 percent by early May, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange. Chances of a move at the central bank’s next meeting on March 2 stood at 48 percent at 12:30 p.m. in Sydney, up from 24 percent prior to today’s report.

The central bank says Australia’s economic growth will accelerate this year, boosted by demand from China for natural resources such as coal and iron ore that will deepen a scarcity of workers.

Gross domestic product will climb 3.25 percent in the three months through December 2010 from a year earlier, after gaining an annual 2 percent in the fourth quarter of 2009, the bank said in its quarterly monetary policy statement published last week.

“It now looks likely that the unemployment rate has peaked around 5.75 percent, a much better outcome than thought likely early last year,” when the government forecast the jobless rate would reach 8.5 percent in 2010, the central bank said on Feb. 5.

Resource Projects

The number of full-time jobs gained 15,900 in January and part-time employment increased 36,900, today’s report showed.

A shortage of workers may increase costs and cause delays at the nation’s liquefied natural gas projects, Fitch Ratings said on Feb. 8.

The Maritime Workers Union of Australia has secured a A$50,000 pay increase over three years for workers at Total Marine Services Ltd., the Australian Broadcasting Corp. reported last week.

Marius Kloppers, chief executive officer of BHP Billiton Ltd., the world’s biggest mining company, said yesterday that the skills shortage in Australia’s resources industry is emerging faster than expected.

Chevron in December announced it signed an $82 billion deal with Japan’s Tokyo Electric Power Co. to supply liquefied natural gas from its Wheatstone field in Western Australia. The project is forecast to generate 6,500 jobs during construction.

It is in addition to the Chevron-led Gorgon gas venture, which is forecast to create another 10,000 jobs when construction starts this year.

Harvey Norman Holdings Ltd., Australia’s biggest furniture and electronics retailer, was “pretty happy” with Christmas sales at its stores compared with year-earlier numbers that were boosted by government stimulus, its Chairman Gerry Harvey said in an interview last month.