Australian employment swung higher in March as companies ramped up full-time hiring in a mark of confidence in the economy, keeping upward pressure on official interest rates. The Australian dollar edged up while bill futures held on to modest gains with the strong data doing little to alter the outlook for a hike at the Reserve Bank of Australia's (RBA) next policy meeting on May 4.
Thursday's data showed unemployment stayed low at 5.3 percent, with a healthy 30,100 full-time jobs being added. That was the biggest rise since November and the seventh month of gains. Full-time jobs offer better security and higher wages. The robust labour market had showns signs of a breather in February, when 4,800 jobs were shed, but returned to growth in March with a 19,600 increase in overall employment.
Earlier this week, the RBA raised its key cash rate by 25 basis points to a 14-month high of 4.25 percent and flagged more hikes in coming months as the economy recovered from the global economic downturn at a much faster pace than expected. Investors are pricing in a 32 percent chance of a rate hike in May while the cash rate is expected to be raised by 95 basis points in the next 12 months.
Part of the reason for the tightening bias is because the Australian economy is expected to get a huge boost from higher iron ore and coal prices that will lift incomes and business investment over the next year. The jobs market has shown remarkable growth, with nearly 215,000 jobs being added since August last year.
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