Australia employment soars by 71,500, market gives up on rate cut
Australian employment soared by 71,500 in February, far above any forecast and the biggest increase in over a decade, the most compelling sign yet that low rates and rising asset prices are fuelling an economic pick-up.
The Australian dollar and bond yields jumped on the startlingly strong figures, which were seen as almost ruling out any cut in interest rates before the middle of the year.
"It's spectacular employment growth," said Brian Redican, a senior economist at Macquarie.
Thursday's data from the Australian Bureau of Statistics showed full-time jobs rose 17,800 in February while part-time employment climbed 53,700. The jump helped keep the jobless rate steady at 5.4 percent even though the participation rate rose sharply to 65.3 percent.
A rise in participation is often a sign of an improving economy as people feel encouraged enough to look for work.
"With that kind of employment growth, obviously policy makers would be feeling pretty comfortable with the current policy settings," added Redican.
Investors seemed to agree and moved quickly to price out much chance of a further cut in the 3 percent cash rate.
Swap rates slashed the amount of easing implied for the year ahead to just 5 basis points. A couple of weeks ago they had 45 basis points pencilled in. Interbank futures <0#YIB:> have the likelihood of an easing at no more than 50-50 and then not until late in the year.
Yields on three-year government debt shot 20 basis points higher Thursday to reach 3.15 percent, the highest since April last year. That was the
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