(Bloomberg) -- Australia’s jobless rate fell to a 13-1/2 year low as the economy added more jobs than expected in February, in a result that’s likely to embolden hawks who are predicting an interest-rate increase as early as June.
Unemployment declined to 4% in February, the lowest level since August 2008, exceeding expectations for it to edge down to 4.1%, Australian Bureau of Statistics data showed on Thursday. Employment rose 77,400 from a month earlier, led by full-time roles, and more than double estimates. Labor market participation also edged higher.
“Participation rose to a new record high in February and was around 0.6 percentage points higher than the start of the pandemic,” said Bjorn Jarvis, head of labor statistics at the ABS. “The increase in participation continues to be particularly pronounced for women.”
The Australian dollar pushed slightly higher and was trading at 73.13 U.S. cents at 11:42 a.m. in Sydney.
The result suggests the Reserve Bank is likely to soon see the wages rises it wants before raising rates, with leading indicators pointing to the labor market tightening further. Money markets are pricing an RBA hike in June, while most economists have settled on August for rate liftoff.
Job ads data released last week showed construction and mining, mobile plant operators, animal and horticulture, education and healthcare are facing the sharpest labor squeeze at the moment.
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RBA Governor Philip Lowe says policy makers can wait longer before raising rates as inflation Down Under isn’t as pressing as in other jurisdictions. He’s testing to see how far he can drive down the jobless rate with a record-low 0.1% cash rate before wages growth take off.
His stance contrasts with the Federal Reserve, which raised interest rates for the first time since 2018 on Wednesday, a week after the European Central Bank delivered a hawkish surprise.
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