Thursday April 6, 2006
Australian unemployment drops to 5%, a 30-year low
SYDNEY (AP) - Australian unemployment dropped to a 30-year low of 5 percent in March, the government announced Thursday.
The Australian Bureau of Statistics said 27,000 new jobs were created during the month, cutting unemployment from 5.2 percent in February and surprising analysts who had predicted joblessness would remain steady in March.
Economists said the strong employment could also drive up wages and put pressure on the country's central bank, the Reserve Bank of Australia, to raise interest rates.
"The labor market is still very strong so wage pressure, if anything, is going to be heightened by this kind of number,'' Westpac economist Jonathan Cavenagh said.
"Definitely it means that it's likely that the RBA will heighten its tightening bias. We still don't think they are going to move but it definitely increases the chances of a move at some stage down the track.''
The central bank on Wednesday left its benchmark interest rate unchanged at 5.5 percent for the 13th straight month.
"These figures show there is still some strength left in the labor market,'' Treasurer Peter Costello told reporters in Melbourne.
Costello said while unemployment was low, he did not see it threatening inflation if wage growth is kept in check.
"It's important to make sure that wages are kept restrained and if we keep our wages restrained, and inflation down, that will be consistent with growth in the economy and falling unemployment,'' he said.
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