By Jacob Greber March 11 (Bloomberg) — Australian employers added fewer workers in February than economists forecast, giving central bank Governor Glenn Stevens scope to slow the pace of future interest-rate increases. The number of people employed rose 400 from January, the smallest gain in six months, the statistics bureau said in Sydney today. The median estimate of 25 economists surveyed by Bloomberg was for an increase of 15,000. The jobless rate rose to 5.3 percent from a revised 5.2 percent. Weaker employment growth may prompt consumers to trim spending in coming months. Governor Stevens last week raised borrowing costs by a quarter point to 4 percent for the fourth time in five meetings, and signaled further moves as the nation’s economic growth accelerates. “We’ve had almost 200,000 new jobs created over the previous five months, so there was always going to be a pullback at some time,” Adam Carr , a senior economist at ICAP Australia Ltd. in Sydney, who forecast employers would cut 15,000 jobs last month, said ahead of today’s decision. “Leading indicators are suggesting solid jobs growth” this year rather than an acceleration, he added. The number of full-time jobs gained 11,400 in February and part-time employment decreased 11,000, today’s report showed. Cadbury, Boeing Cadbury Plc, the U.K.-based confectioner, said last month it will fire 60 workers in Australia when it closes its Melbourne warehouse this year. Boeing Co. said last week it will shut its plant in Sydney in 2012 and consolidate its Australian aerospace manufacturing in Melbourne. The move may see 350 jobs lost in Sydney with 300 positions offered in Melbourne, the company said on March 4. Investors are betting there is a 26 percent chance of a quarter-point increase in the overnight cash rate target to 4.25 on April 6, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 8:56 a.m. The chance of a 25 basis point move by the end of next quarter stands at 100 percent. Stevens is the first Group of 20 central banker to raise borrowing costs in 2010 after leading the world in boosting benchmark rates three times last quarter amid mounting evidence Australia’s economy will strengthen after skirting the global recession in 2009. The moves have taken the Reserve Bank’s overnight cash rate target to 4 percent from a half-century low of 3 percent at the start of October. Inflation Threat “Australia starts the current expansion with considerably less spare capacity than earlier thought likely, and with less than at the starting point of previous expansions,” central bank Assistant Governor Philip Lowe said yesterday. “We will need to keep a strong focus on improving the supply side of the economy so that demand can grow solidly without putting upward pressure on inflation,” he said. Gross domestic product rose last quarter at the fastest pace in almost two years, climbing 0.9 percent from the three months through September as companies increased investment. Growth is also being stoked by Prime Minister Kevin Rudd ’s decision to spend A$22 billion ($20 billion) on roads, railways and schools. GDP is forecast by the central bank to climb 3.25 percent in the three months through December 2010 from a year earlier, after gaining an annual 2 percent in the fourth quarter of 2009. Business investment is currently equivalent to around 16 percent of GDP, which is “not far below its peak level in the past four decades and is expected to rise a little further over the next couple of years,” Lowe said yesterday in Sydney. Job Advertisements Australian advertisements for job vacancies jumped 19.1 percent in February, the most in a decade, while consumer and business confidence advanced, reports showed this week. Increased spending on projects such as the Chevron Corp.- led A$43 billion Gorgon gas venture in Western Australia is worsening a skills shortage. Construction on the project began this year and will generate up to 10,000 jobs. Marius Kloppers , chief executive officer of BHP Billiton Ltd., the world’s biggest mining company, said on Feb. 10 that the skills shortage in Australia’s resources industry is emerging faster than expected. More than A$100 billion of resources projects in Western Australia are likely to generate about 40,000 construction jobs and 12,500 permanent positions, a state government report released last year shows. Population Growth Prior to today’s release, government reports showed Australian employers added 194,600 jobs in the five months through January, the biggest increase in more than three years. The nation’s unemployment rate has held below 5.9 percent since July 2003. “Employment is growing strongly, more than keeping pace with the fastest migration-fueled growth in population in decades,” Kieran Davies , chief economist at RBS Group Australia Ltd. in Sydney, said ahead of today’s report. In contrast, the unemployment rate in the U.S. was 9.7 percent in February, and 9.9 percent in January among European Union countries. Australia’s participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.2 percent in January from 65.3 percent, today’s report showed. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
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Australia Employment Rises Less-Than-Estimated; Jobless Rate Gains to 5.3%
