Jobs boom returns to Australia as confidence rises

Australian Employment Rate

In the light of growing confidence in the nation's economy, Australia's employment rate improved in March as businesses increased levels of full-time hiring.

As a result greater upward pressure has been put on interest rates and the Australian dollar has crept up as things are starting to look up ahead of the Reserve Bank of Australia's (RBA) next policy meeting on May 4.

Australian employers added more workers in March, keeping the unemployment rate at 5.3 percent, almost half the level of the US (9.7 percent) and Europe and underscoring central bank Governor Glenn Stevens' decision to boost borrowing costs.

The number of people employed rose by 19,600 from February, when it fell a revised 4,700, the statistics bureau said in Sydney today. The jobless rate may even fall to or below 5 percent this year, economists including Commonwealth Bank of Australia's Craig James forecast. However the government said last November that the rate will be 6.5 percent in the June 2010 quarter.

Ramping up income and investment

"Today's data reinforces recent trends that the labour market is tightening and the unemployment rate is trending lower," said Spiros Papadopoulos, economist at National Australia Bank. "That will maintain the pressure on the RBA to get rates back to 'average', and so a May rate hike remains on the cards."

Things could well keep on improving for Australia as the economy is expected to benefit from the rising price of iron ore and coal, ramping up income and business investment.

But it is the job market that has shown the most impressive recovery, growing by almost 215,000 jobs from last August.

Leading indicators of the demand for labour, like job ads and vacancies, point to more growth ahead.

"The outlook for hiring is good with all the investment in mining and infrastructure in the pipeline," Stephen Walters, chief economist at JPMorgan, told CNBC.

"That suggests we'll be running into skill shortages pretty soon, which has to be a concern for the Reserve Bank."

Avoiding the dangers

Much of Asia has played its part in Australia's good performance as the country cashes in on the region's huge thirst for it resources; China and India in particular. However the mining industry only makes up about 1.5 percent of the 10.8 million Australian jobs.

Projects like the massive Gorgon liquefied gas development in Western Australia will create 10,000 jobs at the peak of construction and mining creates jobs elsewhere in the economy through the profits it makes and the high wages and taxes it pays.

So, things are looking pretty good down under, as long as the country can avoid inflation and steep interest rates - the dangers of rapidly growing employment.

Related Articles:

Australia interests rates | Asia-Pacific feature strongly on rich list | Australia overhauls immigration policy

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

Like this article? Get the RSS feed: