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months in September, prompting the government to claim Thursday its
economic stimulus measures were helping defy the global downturn.
Unemployment fell to 5.7 percent from 5.8 percent in August, with
figures showing the number of people with jobs jumped 40 ,600 ,
while full-time employment rose by 35 ,400. The news sent the
Australian dollar soaring to a new 14- month-high of 90.33 US cents
while the stock market gained 1.55 percent. "It's a phenomenal
result," Commonwealth Securities economist Savanth Sebastian told
Sky News after the data release. But Employment Participation Minister
Mark Arbib urged caution, saying that the figures reflected only one
month's performance and emphasised the economy remained very
fragile. "The stimulus is working but again there's still a long way
to go in the global recession," he told reporters in Melbourne.
"There's still a great deal of uncertainty about what is happening in
the United States, in Europe and in China and for those reasons the
stimulus must be kept in place," he said. Arbib also warned that 18
,000 jobs had to be created every month for the figures to stay
even. But the numbers far outstripped economists' expectations and
sparked speculation that unemployment had reached its peak. Analysts
had forecast an employment decline of 10 ,000 with the unemployment
rate rising to 6.0 percent. Economists now say that the employment
rate would probably not breach the six percent mark, despite a
government prediction earlier this year of 8.0 percent next year.
The surge in employment came two days after Australia became the
first advanced economy to raise interest rates since the global
financial crisis and promised more rises to come. The central bank
raised the official cash rate by 25 basis points to 3.25 percent,
up from a 49- year low after an aggressive round of cuts credited
with helping fight off the worst global downturn since the Great
Depression. In a long series of cuts, the bank had slashed the rate
from a high of 7.25 percent a year ago with Australia's economy
slowing as the world sank into recession. But Reserve Bank of
Australia governor Glenn Stevens made it clear Tuesday that with
growth returning to the economy and inflation close to target, it was
time to reduce monetary policy stimulus and raise rates. The move
came after Australia became the only major Western nation to avoid a
recession in the worldwide slump, posting growth of 0.6 percent in
the three months to June -- the best in the developed world.
Economists said the stronger-than-expected jobs figures for September
had proved the central bank was right to begin raising rates again
and said more hikes were likely in November. RBC Capital Markets
senior economist Su-Lin Ong said the numbers reflected the underlying
strength of the Australian economy, but also boosted the chance of a
rates rise in the short term. "It will have the policy makers
wondering if we've seen the peak (in unemployment) in this cycle,"
she said. "It completely supports and justifies the RBA's decision to
begin its policy tightening cycle this week, we continue to think
they will raise rates further in the coming months. "
