Enjoy the sub-4% official interest rates while you can, they won’t be around much longer, nor will home loan rates at present levels.
The continuing surge in new jobs in January will see the bias in monetary policy now move decisively towards further rate rises.
It was the strongest jobs performance for three years.
Figures from the Australian Bureau of Statistics showed that more than 52,000 jobs were created last month, with the rate falling to 5.3% from the surprise 5.5% set in December.
That won’t necessarily mean a rate rise, but the central bank will now be far more alert to inflationary pressures.
The unemployment rate is now back where it was in February of last year.
The report was not expected in the markets. It was much, much stronger than anyone had forecast.
Most market forecasts had a smaller 15,000 or so jobs pencilled in, with the rate either steady, or easing upwards top 5.6%.
Coming after the drop in consumer and business confidence in January and early February (but not business conditions) and a fall in building approvals and housing finance, there were signs the rate rises were slowing parts of the economy.
But the labour force figures were undeniably strong.
The ABS said that was the biggest increase since December 2006, as the last boom was gathering strength.
It takes the number of new jobs since last September, when the rebound started, to well over 180,000.
The labour market is bounding ahead and it’s now very clear the jobless rate in this country in the 2009 slowdown peaked at 5.8%, a level a few years ago many economists would have thought close to full employment.
The Reserve Bank sat on its hands at its February meeting, the first for 2010.
It got confirmation that the labour market isn’t slowing, despite the three rate rises.
The news will set off alarm bells at the RBA.
Only last Friday, the bank picked out a rapidly tightening labour market as a risk to recovery, saying:
"Perhaps the most likely scenario in which growth and inflation are both significantly higher than expected is one in which confidence continues to build on the back of a further pick-up in commodity prices and there is a larger increase in investment in the resources sector than currently expected.
"In this scenario, non-residential construction might also pick up more quickly than is currently expected as credit constraints ease.
"If this were to occur, capacity constraints, particularly in the construction sector, would be likely to emerge and wage growth would be likely to accelerate more quickly than currently expected.
"The result would be higher inflation," the RBA warned.
On Wednesday, BHP Billiton CEO, Marius Kloppers complained that his company was already seeing evidence of this.
"We are concerned about skill shortages," BHP Billiton chief executive Marius Kloppers told analysts in a conference call.
"To be frank with you those skill shortages, particularly in Western Australia and certain skill segments, have come a little bit more quickly than even we anticipated," Mr Kloppers said.
The Reserve Bank talks to companies like BHP and others in this sector (as well as a host of other groups each month).
They will have picked up on this rapid tightening in labour in WA.
The ABS said the rise in employment "was driven by a rise in part-time employment, up 36,900 to 3.314 million together with a rise in full-time employment, up 15,900 to 7.652 million".
"For the third consecutive month, the ABS reported the number of people unemployed had decreased, down 22,300 persons to 612,000 in January.
"The ABS seasonally adjusted monthly aggregate hours worked series showed a fall in January, down 14.8 million hours to 1,518.1 million hours.
"The participation rate in January remained at 65.3 %."
That rise in jobs and fall in working hours in the month has confused everyone.
