Strong employment growth puts pressure on Australia to lift rates

11:28, November 11, 2010      

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Australian jobs growth remains " pretty strong" despite an increase in the jobless rate in October, suggesting the central bank will continue lifting interest rates next year, economists said on Thursday.

The unemployment rate rose to 5.4 percent in October while total employment rose by 29,700 to 11.356 million in the same month, according to figures released by Australian Bureau of Statistics (ABS) on Thursday.

Australia's major bank Commonwealth Bank chief economist Michael Blythe said the result was a "mixed bag", but the employment figures were the "true indication" of the strength in the underlying economy.

"The labor market wins out in the short term, but it does suggest that the Reserve Bank will be back, probably not until next year, but certainly back at some point to lift interest rates further," Blythe said.

"The underlying picture in terms of total jobs growth is still pretty strong," he said.

Meanwhile, economist Helen Kevans at JP Morgan, a leading financial services firm, said despite the headline unemployment figure, the data showed a "pretty healthy set of numbers".

She said the Reserve Bank of Australia (RBA), the central bank, would probably hold the cash rate steady at 4.75 percent in December, because the jobs data showed the country was facing immediate capacity restraints.

Source: Xinhua


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