Australian jobs growth sped past forecasts for a second month in March and drove the jobless rate to its lowest in four months, holding out the hope that unemployment may have peaked much earlier than anticipated. The local dollar jumped half a cent to its highest in almost five months after data showed a net 18,100 new jobs were created in March, well above forecasts of just 5,000.
That came on top of a rousing 48,200 increase in February and brought gains for the year so far to a hefty 88,000, according to the Australian Bureau of Statistics. The marked step-up in hiring pushed the jobless rate down to 5.8 percent, an unusually large drop from February's decade-peak of 6.1 percent and a major surprise for analysts who had feared it was heading inexorably higher.
"The job market is showing signs of stabilising with unemployment having peaked or pretty close to it," said Savanth Sebastian, an economist at fund manager CommSec. "There is no question that the economy has lifted and it is pretty clear that the transition in activity from mining to housing construction has been a case of so far so good." The upbeat report should underpin the Reserve Bank of Australia's optimism that the economy is picking up speed and that there is no need to cut interest rates further from their record low of 2.5 percent.
The futures market had already priced out any chance of another easing and has been toying with the idea of a hike by year-end, giving it a probability of around 40 percent. That is one reason the local currency has climbed more than four cents in as many weeks, although the higher it goes the more pressure it puts on trade-exposed sectors of the economy. The latest rise in employment took annual jobs growth up to 1.1 percent and nearer the 1.5 percent pace needed to absorb new entrants into the workforce and stop the unemployment rate from rising further.