CANBERRA Australia's economy is "performing beautifully" and is unlikely to overheat, Prime Minister John Howard said Friday.

"I think the economy is performing beautifully. The hum of the machine of the Australian economy is a delight to the ear," Howard told AFP.

Howard appeared to hint a widely-anticipated rise in official interest rates next month to rein in inflation was unnecessary by saying the economy was not running too fast.

"It's in no danger of overheating," the prime minister said.

"I think people who use those sorts of descriptions are in danger of sort of searching for a headline."

Speculation that the Reserve Bank of Australia would lift official interest rates next month was boosted Thursday after data showed a fall in unemployment to 6.3 percent in March from 6.6 percent the previous month.

"This reinforces our view that the reserve bank should tighten rates in May," HSBC senior economist Anthony Thompson said.

Last year the Australian economy expanded 4.1 percent, one of the best rates in the industrialized world. Some economists expect the growth to ease slightly this year, due to a slowdown in one of the main growth drivers, the housing industry.

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