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Australian Employment Jumps, Igniting Interest Rate Concerns

Australian employment jumped in November, sending bond futures tumbling while the local dollar climbed. The report dealt a setback to speculation that interest rates may have finally peaked.

Employment jumped 36,200 in November, blowing past forecasts for a gain of 10,000 jobs and more than recovering October's surprise 32,500 fall. That brings net jobs created in the year to date to a quarter of a million. Full-time jobs rose by a whopping 57,400, while the unemployment rate held at a 30-year low of 4.6%, surprising analysts who had looked for a rise to 4.8%.

However, a run of soft data recently culminated in Wednesday's report on gross domestic product (GDP) which showed the economy grew a meager 0.3% in the third quarter.

Some analysts are treating the figures with skepticism. In an interview with CNBC Asia's "Market Watch", Juliana Roadley of Commonwealth Securities said, "We have to keep in mind the volatility we've been finding in these figures. Even when we look at the GDP growth. Yesterday it was only up by 0.3%, but then they revised the second quarter up from 0.2% to 0.5%.

Roadley added that it was best to look at the data with a long-term view. The month of November also sees a regular influx of new employees and he elections in Victoria have boosted employment in that state.

But the strength of the employment data was enough to lead investors to dump bonds, sending three-year futures sliding 0.9 points to 94.16.

The Australian dollar firmed to 0.7875 U.S. cents while March interbank futures revised up the probability of another rate increase to 20%, from just 4% on Wednesday.

Battling to restrain inflation, the Reserve Bank of Australia (RBA) has raised interest rates three times since May taking them to a six-year high of 6.25%.