Australia employers probably added 25,000 extra jobs

August 9, 2007 - 0:0

SYDNEY (Bloomberg) -- Australian jobs growth probably accelerated in July, adding to signs the nation will extend its 16 years of economic expansion.

Employers added 25,000 jobs after a 2,500 gain in June, according to the median estimate of 28 economists surveyed by Bloomberg News.
The unemployment rate probably rose to 4.4 percent from 4.3 percent as more people sought work. The Bureau of Statistics releases the report today at 11:30 a.m. in Sydney.
Australia's central bank Wednesday raise its benchmark interest rate to an 11-year high of 6.5 percent to curb inflation stoked by faster economic growth and a booming jobs market.
Miners are hiring workers as they expand to meet soaring Asian demand for commodities and retailers are opening new stores as consumer spending picks up.
“With business confidence high, it's unlikely an interest-rate increase will damp the jobs market for long,” said Robert Olivier, director of recruitment company Olivier Group. “In our experience, over the past eight rate rises, employers may pause for a month, but then they start hiring again.”
The official employment report may be distorted by new rules introduced on July 1 by the government to increase participation in the workforce among people receiving welfare.
--------- “Major influence”
“The government's welfare-to-work program is set to have a major influence on the labor market in coming months,” said Amber Rabinov, an economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ANZ Bank estimates the labor supply may have risen by 90,000 people from the beginning of July.
“Assuming it takes time for these new entrants to find jobs, the increased labor supply will show up as a significant rise in the unemployment rate to around 4.8 percent in July,” she said.
Estimates for the July jobless rate range between a 33-year-low 4.2 percent and a 15-month high of 4.9 percent.
Job gains have boosted consumer confidence and spending. Retail sales jumped 1.4 percent in June from May, the biggest increase in two years.
The economy expanded 1.6 percent in the first quarter from the previous three months, the fastest growth in more than three years. Consumer spending contributed 0.9 percentage point.
Inflation accelerated to 1.2 percent in the second quarter from the previous three months. Core inflation, which excludes volatile items, quickened to 0.9 percent from the first quarter and 2.7 percent from a year earlier.
---------- Wage increases
Australia's low jobless rate has made it harder for companies to find workers, fueling wage increases at miners, though not yet in other industries.
Wages rose 4.1 percent in the three months ended March 31 from a year earlier. The central bank has previously indicated wages growth of 4.5 percent could stoke inflation.
“The most capacity-constrained sectors such as mining and construction are showing 7 percent annual wage gains,” said Stephen Roberts, director of research at Grange Securities Ltd. in Sydney. “We see the Reserve Bank hiking its cash rate twice over the next six months to contain inflation.