It didn’t take long for the "rate rise looms" mob to get going yesterday after a two days of rest following the Reserve Bank’s surprise move not to boost its cash rate on Tuesday.
Analysts, economists and media all leap on the rate rise bandwagon after another month of surprisingly strong jobs numbers in September, according to yesterday’s report from the Australian Bureau of Statistics.
The dollar jumped on the news, rising past 98 US in local trading yesterday and up 2.5 USc from the sub-96c low hit after the Reserve Bank failed to raise rates on Tuesday.
Offshore early last night it went further, touching 99.17 USc, the highest level since the float in late 1983. The currency then eased under profit taking to trade a touch over 98 USc Friday morning.
In fact the Aussie dollar hit 98.45 USc in local trading yesterday the highest since the 98.49 USc reached on July 15, 2008, which is the highest since the dollar floated in 1983.
While the unemployment rate remain steady at 5.1%, a massive 55,800 full time jobs were created last month, with a net 49,500 jobs created after 6,300 part job jobs were lost (probably converted to full time gigs).
The figure was second only to January when 62,000 net new jobs were created.
Since September last year, around 360,000 new jobs have been created in this country as the economy has gathered pace (and inflation has remained fairly well under control).
That was one and a half times the average pace of the past 25 years.
More than 270,000 of those jobs have come since the start of the year, or just over 30,000 a month, which is extremely strong growth.
September’s gain easily topped the 20,000 new jobs forecast by market economists.
And, naturally the strong jobs result renewed speculation that the RBA will have to raise interest rates at its next meeting, on November 2.
The jobless rate would have fallen, though, if not for a rise in the so-called participation rate.
The participation rate rose to 65.6%, up from downwardly revised 65.4%.
Total employment rose to 11.324 million in the month, seasonally adjusted.
September’s net jobs gain compared with a revised 31,600 net jobs gain for August (30,900 originally).
The ABS report also showed aggregate hours worked by employed people in Australia fell by 0.1% in September, seasonally adjusted.
That followed a rise of 1.0% in August.
Aggregate hours worked in August 2010 were 3.3% higher than in September 2009, a turnaround from the previous 12 months which recorded a fall of 1.1% in aggregate hours worked.
It’s not the first time that a fall in monthly hours has been recorded in 2010, there were much larger drops in January, March and April while the number of net new jobs in the three months was more than 100,000.
So at the end of a big week for economic data for Australia, what do we know that we didn’t know a week ago?
Nothing dramatically new except confirmation that retailing is solid without being alive, car sales remain very strong, the trade account is very solid, housing is weakening, both new and pre-loved, the jobs market remains very strong and the Reserve Bank is well, not so reserved, but not alarmed, yet, about inflation.
And, given that, the Aussie dollar could hit parity before the November 2 meeting of the RBA board if the data flow remains as strong as we saw this week.
A cautionary warning: In an extensive note the ABS said the employment data is based on estimates of the size of the workforce and the size of the Australian population and takes into account the pace of immigration.
Those factors are being checked and it’s possible the estimates of the growth in the population and the workforce could be out of kilter with what is actually happening.
If that’s the case, and the ABS is currently checking its information, then jobs growth and the size of the work force might be overestimated and will have to be revised downwards in coming month.
