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Australia Employment Surges in April, Jobless Drops

Wednesday, 8 May 2013 | 10:24 PM ET
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Australian employment surged by 50,100 in April to more than make up for a drop the previous month and nudge the jobless rate down, a resoundingly upbeat report that sent the local dollar speeding higher.

Thursday's data from the Australian Bureau of Statistics also showed a strong increase of 34,500 in full-time jobs and a solid rise in working hours, readings that should temper worries about a slowdown in the domestic economy and could possibly delay the next rate cut beyond July.

The jump in employment far outpaced forecasts for just a 12,000 rise and brought gains so far this year to a healthy 103,600. The unemployment rate also surprised by edging back to 5.5 percent, even as more people went looking for work.

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The resilience of the data contrasted with the Reserve Bank of Australia's (RBA) decision to cut interest rates to a record low of 2.75 percent this week, and led investors to slightly scale back the chance of another easing at least in the very short term.

"The labor fore data continues to surprise, there is clearly a positive job pulse in the Australian economy," said Michael Blythe, chief economist at Commonwealth Bank.

"Given what they've (RBA) said, we think they'll cut rates again at some point, but they won't be in a rush."

Interbank futures duly eased as the market tinkered with expectations of the timing of another cut. A move by July now looks more like a 50-50 bet than the sure thing priced in before the jobs news.

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That reversed some of the Australian dollar's recent losses and the currency shot up to $1.0240, from $1.0189 ahead of the figures.

Still, the strength of the currency is one reason the RBA eased this week, so further gains would likely add to the case for another move in time.

After two months of wild swings in jobs, analysts had been unsure what to expect for April and forecasts had ranged all the way from a drop of 10,000 to an increase of 22,000.

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Leading indicators of labor demand and surveys of business had pointed to subdued hiring, though neither were there signs of mass job shedding.

The RBA has said it expects the unemployment rate to rise "a little further" in coming months.

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