SYDNEY, Sept 14 — Australia's jobs blew past expectations to surge the most in two years in August, yet unemployment was static as more people looked for work, limiting upward pressure on wages, inflation and interest rates.
Data from the Australian Bureau of Statistics showed employment leapt 54,200, the biggest jump since October 2015 and far above the 15,000 increase forecast by economists.
That was the 11th straight month of gains, the longest streak in 23 years.
The Australian dollar briefly hopped up 20 ticks on the data to touch a high of US$0.8017. It last stood at US$0.8006 against a resurgent greenback.
Employment was racing at an annual rate of 2.7 per cent in Australia, compared with 1.4 per cent in the United States. Over the past six years, annual US jobs growth has not exceeded 2.3 per cent.
A blockbuster 269,000 jobs have been created so far this year but the labour force has also expanded by an equally sizable 257,000, keeping the jobless rate steady at 5.6 per cent.
Indeed, the participation rate was the highest since September 2012. While that is a sign of greater confidence, it also means more labour supply will restrain wages, which are already growing at a record-low pace.
That in turn limits upward pressure on inflation which is stuck below the central bank's 2 per cent to 3 per cent target band.
"The progress in reducing spare capacity has been much slower," said Paul Dales, chief economist at Capital Economics.
"While faster employment growth will put more money in households' pockets, it probably won't translate into much faster wage growth."
The Reserve Bank of Australia (RBA) slashed interest rates twice last year to a record low 1.50 per cent. It has since stood pat on policy and most economists polled by Reuters this month see rates steady over a one-year horizon.
The RBA is confident the momentum in the labour market will continue as economic growth picks up and a measure of business conditions rises to its highest since early 2008.
National Australia Bank's survey of more than 400 firms showed its index of business conditions firmed 1 point to +15 in August, triple its long-run average of +5. The survey's employment index surged 4 points to +11, a major turnaround from earlier in the year when it was stuck around 0.
NAB's group chief economist Alan Oster noted this outcome pointed to an annual job creation rate of around 270,000 in coming months, which should be enough to nudge the unemployment rate down from current levels. — Reuters