Thursday February 8, 2007
Australia's jobless rate reaches 30-year low of 4.5%
CANBERRA (AP) - Australia's unemployment rate fell to a fresh 30-year low in January, increasing the risk of a further interest rate rise should a tight labor market result in a spike in wages growth, new figures showed Thursday.
While January employment fell by a seasonally adjusted 3,600, full-time employment rose by a further 3,200, and helped the unemployment rate fall to a new low of 4.5 percent, Australian Bureau of Statistics figures showed.
Economists had expected a jobless rate of 4.6 percent for a fourth straight month.
Treasurer Peter Costello said the tight jobs market made it more difficult to keep inflation within the target range of 2 and 3 percent, which the central bank varies interest rates to maintain.
"I think it can be done but we haven't been here for 31 years ... so it's going to take a new effort,'' he told reporters.
Costello said Australia would be able to generate even more jobs through the course of 2007 if the economy continued to grow.
Australia is enjoying its 16th year of uninterrupted economic growth, fueled by the China-driven resources boom.
Employment Minister Joe Hockey said Australia's January unemployment rate is the lowest since May 1976.
The Reserve Bank of Australia announced Wednesday that it was leaving official interest rates unchanged at 6.25 percent for a third consecutive month.
Michael Workman, senior economist at the Commonwealth Bank of Australia, said strength in the job market is the major reason why the central bank will retain a vigilant tone for now on interest rates.
"This is the one, more than any other, that suggests the next move in rates could be up,'' he said.
The central bank raised interest rates by a quarter percentage point three times in 2006 - in May, August and November - as quarterly consumer price data showed a pickup in inflation outside the bank's target range.
Australia's consumer price index fell 0.1 percent in the fourth quarter of 2006, slowing the on-year growth rate to 3.3 percent, from 3.9 percent in the third quarter, and quelling expectations of a follow-up rate hike at the bank's first board meeting of 2007 on Tuesday.
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