(Bloomberg) -- Australian employment surged in October, led by full-time jobs, as record-low interest rates helped spur hiring. The currency jumped.
The data suggest policy makers’ patience -- they have kept the cash rate at 1.5 percent for more than two years -- is being rewarded with stronger employment and faster economic growth. Governor Philip Lowe is betting on a tightening labor market to fuel wage growth and inflation and lay the ground for the first rate increase since 2010.
“The Reserve Bank would be very happy with today’s report,” said Callam Pickering, an economist at global jobs website Indeed, who previously worked at the RBA. “It consolidated the gains from last month and strong growth in full-time roles points to a thriving jobs market.”
The Australian dollar rose to 72.77 U.S. cents at 12:25 p.m. in Sydney from 72.35 cents before the report. Traders are now pricing in a 40 percent chance of a rate hike in August next year, from 25 percent before the release.
The solid report comes a day after data showed wages rose 2.3 percent in the third quarter, the fastest annual pace in three years. However, economists noted that outcome was inflated by a 3.5 percent increase in the minimum wage. Inflation, meanwhile, is still bumping along below the bottom of the central bank’s 2 to 3 percent target.
“Much progress still needs to be made, which suggests that a rate hike in the near-term is unlikely, but it is still a step in the right direction,” Pickering said. “Wage growth, rather than employment, is the more pressing issue for the RBA.”
Australia’s economy expanded 3.4 percent in the second quarter, the fastest annual pace in six years, after growing 3.2 percent in the previous three months.