Aussie job numbers are almost unbelievable
City Index March 14, 2013 5:32 AM
<p>Australia added 71,500 jobs in February compared with market estimates of 9,000. We haven’t seen a miss this big in a long time. Economists need […]</p>
Australia added 71,500 jobs in February compared with market estimates of 9,000. We haven’t seen a miss this big in a long time. Economists need to sharpen their pencils.
To put this figure into context, the United States with a population around 15x that of Australia, with record low rates and numerous rounds of quantitative easing, added 236,000 jobs during the same month. Australia’s unemployment rate stands at 5.4% which was flat on the prior month. The United States with all that job growth is still at 7.7% unemployment.
Many will dispute the accuracy of today’s Australian job report but the numbers are what they are. Jobs are being created and enough to offset a rise in the labour market as measured by the participation rate. House prices in major metropolitan Australian cities are improving, inflation is in check and the government still has aspirations to balance its budget in the next twelve months.
This all means one thing – the 3% cash rate is unlikely to fall, unlikely to rise suddenly soon either and most likely to remain flat for another two or three months before things are re-evaluated. The Australian dollar is the major beneficiary here, up on the job report to last trade at 103.77 US cents. It’s buying 99.45 yen – again all one way traffic ever since late November last year.
A high A$ isn’t all good news for Australia though, in fact on balance its more of a negative. The services economy continues to struggle and the central bank knows very well the epic task ahead of trying to contain the currency appreciation. The best it can do is talk it down, something RBA members undertook over the past few weeks, but today’s job reports almost completely abolishes that view.
Overall, a strong A$ is likely to persist, hurting domestic exporters, weakening the translated earnings of Australian companies generating earnings offshore and increasing the relative value of Australian stocks as measured by the ASX200 index – hence the 0.3% decline on the back of the job report.
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