Australian dollar leaps after jobs data

The Australian dollar rose to its highest levels since the end of March today after data showed a surprisingly strong jump in employment.

The Australian dollar rose to its highest levels since the end of March today after data showed a surprisingly strong jump in employment.

The Australian dollar was trading at US77.35c at 5pm (AEST). It was trading at US75.95c late yesterday.

The economy added 37,700 new jobs in March, easily outpacing economists’ expectations of a rise of 15,000 and lowering the unemployment rate to 6.1 per cent, the lowest since December.

The statistics bureau revised the February joblessness rate to 6.2 per cent from an earlier reading of 6.3 per cent. Economists had expected an unemployment rate of 6.3 per cent in March.

Economists welcomed the data as evidence that recent falls in the Aussie dollar may finally be seeping through into job creation in sectors outside of mining. The strong jump in employment was almost all in full-time work, and followed a rise of 42,000 in February.

Futures markets scaled down expectations for a cut in interest rates in May to around 55 per cent from 79 per cent at the start of the day.

“Today’s numbers provide further evidence that Australia’s rebalancing act is continuing,” said Paul Bloxham, chief economist at HSBC, Australia.

Still, some economists warned it was too soon to rule out further interest-rate cuts from the Reserve Bank of Australia, with inflation data for the first quarter next week expected to show negligible price risks in the economy.

“We do not see today’s news as sufficient to prevent a near-term RBA rate cut, and we continue to anticipate a 25 basis point reduction in the cash rate to 2 per cent will be announced on 5 May,” said Nomura in a research note.

“The data does support our contention that economy is currently expanding at a moderate pace and that much of the more downbeat media headlines and national angst regarding the economy is likely overdone,” Nomura said.