Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant or accept liability for the accuracy or usefulness of the transcripts. These are copied directly from the broadcaster's website.
Shock jobs surge sidelines economists -

View in ParlViewView other Segments

Shock jobs surge sidelines economists

Peter Ryan reported this story on Thursday, February 11, 2010 12:18:00

ELEANOR HALL: Now to the latest surprise on the strength of Australia's economy. The number of
newly created jobs surged in January and unemployment fell to 5.3 per cent.

The results left economists flat-footed once again.

I'm joined now in the studio by our business editor Peter Ryan.

So Peter just how much of a surprise were these numbers?

PETER RYAN: Well Eleanor, who would want to be an economist at the moment? According to the ABS
(Australian Bureau of Statistics) there were 52,700 new jobs created in January. Now that is way in
excess of forecasts.

Importantly 15,900 of these new jobs were fulltime so employers are hiring. The participation rate
was also up slightly.

But the big news as you said is unemployment - another surprise - down to 5.3 per cent. That's from
5.5 per cent and we saw 5.8 per cent last year. So there is a steady decline.

Economists had been expecting a slight uptick in the unemployment rate but once again they've been
blown out of the water.

ELEANOR HALL: This is great news for job seekers but is it likely that unemployment will continue
to fall or could this be an aberration?

PETER RYAN: Well the initial reaction Eleanor is that many economists believe that the worst is
over on the unemployment front and that's especially given the big margin that we've seen with the
new jobs created - 54,000 plus. And it's unlikely that we'll see any major uptick in unemployment
during the year although that couldn't be ruled out.

But 5.3 per cent does make Australia the envy if we didn't already know it of the developed world.
And just as a comparison the unemployment rate in the United States surprisingly fell last week to
9.7 per cent from over 10 per cent. But even so the United States still has seven million people
out of work since the start of the global financial crisis.

So it's an understatement to say that Australia is travelling well compared to the rest of the
world.

ELEANOR HALL: We just heard the Treasury secretary Ken Henry there say that Australia is through
the economic crisis. What are these latest jobs numbers likely to mean on the downside in terms of
interest rates?

PETER RYAN: Well the downside if you could call it that is a strong economy. It does mean that a
March interest rate hike is on the table or back on the table despite the RBA's silence about this
last week.

And their main concern will be that there's much less spare capacity in the economy than they
thought and that will possibly fuel inflation and they'll be wanting to deal with that.

Most economists have a 5 per cent target for the cash rate by the end of the year. So there's still
some way to go from the current 3.75 per cent.

And just before I go the Australian dollar jumped in anticipation of a rate rise in March or maybe
April, currently buying 88.5 US cents. That's up one cent.

ELEANOR HALL: Peter Ryan our business editor, thank you.