Australia's unemployment rate at 33-year low in September

Australia's unemployment rate fell to a 33-year low as companies hired extra workers for a 11th consecutive month in September, adding to signs the economy's 16-year expansion may be gathering pace.

The number of people employed rose 13,000 last month after climbing a revised 34,300 in August, the Bureau of Statistics said today in Sydney. The jobless rate fell to 4.2 percent from 4.3 percent. The median estimate of 26 economists surveyed by Bloomberg News was for 20,000 new positions and an unchanged jobless rate.

Increased employment supports the central bank's decision to raise its interest rate in August to damp inflation in an economy growing at the fastest annual pace in three years. Mining companies are increasing wages to attract workers as they expand to meet soaring Chinese demand and retailers including Myer Pty. and Just Group Ltd. are opening stores as consumer spending picks up.

``Supported by solid economic growth, the Australian labor market remains as tight as a drum,'' Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney, said before the report was released. ``Strong jobs growth, coupled with widespread skills shortages, will keep the Reserve Bank on the lookout for rising wage costs.''

The Australian dollar fell to 89.77 U.S. cents at 11:38 a.m. in Sydney from 89.95 cents immediately before the report. The yield on the benchmark 10-year government bond fell 2 basis points to 6.21 percent. A basis point is 0.01 percentage point.

Part-time employment rose 30,100 in September. The number of full-time positions fell 17,200, today's report showed. About 10.5 million of Australia's 21 million people are employed. Annual jobs growth last year was the strongest since 1989.

Interest Rates

The Reserve Bank of Australia raised the overnight cash rate target to an 11-year high of 6.5 percent on Aug. 8 and left the benchmark unchanged the past two months. Governor Glenn Stevens said the jobs market and economy were strong.

Nineteen of 27 economists surveyed last week forecast another rate increase by the end of the first quarter of 2008.

A slump in global credit markets and the increase in Australian borrowing costs have failed to derail economic growth.

``Generally, consumers are confident and they feel quite prosperous at the moment,'' said Philip Corne, chief executive officer of luxury-retailer Louis Vuitton Australia Pty. In Sydney. ``People are comfortable about their employment and future earning capacity.''

Adding to signs of faster growth, retail sales increased 0.7 percent in August from July, more than twice as much as economists forecast. Imports climbed 3 percent to a record in August on sales of consumer goods and business equipment.

New Stores

Just Group increased second-half profit 16 percent on higher sales of women's apparel and winter fashions. Australia's largest specialty clothing retailer has hired workers as it opened 25 new stores in the past year, bringing its total number of outlets to 810 across Australia, New Zealand and South Africa.

``Sales and profits for the first six weeks of the new financial year are ahead of the corresponding period of last year,'' Chief Executive Officer Jason Murray said last month.

TPG Inc.'s Myer, Australia's biggest department store chain, reported a ninefold surge in second-half earnings on Sept. 25. Myer opened three new stores in the past year, with four more expected in fiscal 2008. A further 10 will be opened by 2010.

Jobs growth, coupled with rising wages and income-tax cuts, is helping fuel the economy's expansion. The economy grew 4.3 percent in the second quarter from a year earlier, the fastest pace since 2004.

Wages growth edged higher in the second quarter as the labor shortage prompted mining companies to pay more to hire skilled workers. The wage price index climbed 1.1 percent, equaling the strongest increase since the series began in 1997.

The third-quarter pay report will be released on Nov. 14.

Miners Expand

Soaring commodity prices, driven by demand from China and In...


10/10/2007 7:12:23 PM