SYDNEY (BLOOMBERG) - Australian employers added jobs in August, indicating record-low interest rates, a falling currency and weak wage growth is encouraging hiring.
Employment rose by 17,400 from July where economists had forecast a 5,000 increase. The jobless rate dropped to 6.2 per cent, matching their estimates.
Full-time jobs rose by 11,500 while part-time employment increased by 5,900. The participation rate, a measure of the labor force in proportion to the population, fell to 65 pe rcent from 65.1 per cent; matching predictions.
"The unemployment rate does seem stable in a 6 per cent-to-6.25 per cent range," Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney, said after the release. "For a Reserve Bank that's clearly reluctant to cut further, you'd have to get a weakening of the labor market" as one of the conditions before the central bank could consider easing policy again.
The report adds to increasing impetus in the housing construction and tourism industries that are soaking up workers surplus to requirements at mine sites where an investment boom is winding down. Still, a forecast decline in business spending and falling commodity prices are damping the economic outlook and prompted the central bank to cut rates twice this year to a record low 2 percent.
The Australian dollar traded at 69.81 US cents at 11:52 am in Sydney, from 69.52 US cents before the data was released.
Australia is facing the effects of a fall in prices for its key commodity exports. The central bank, which cut rates twice this year, is banking on a lower currency to help a transition to industries outside mining.
Australia's currency "has now adjusted considerably and this adjustment has continued over recent weeks," central bank Deputy Governor Philip Lowe said in a speech on Wednesday. "Just as the appreciation helped stabilize the economy in the upswing of the boom in commodity prices and mining investment, the depreciation is helping in the downswing."
He said there are now signs of a pickup in investment in tourism, citing an increase in work to be done in the construction of hotels and related accommodation. Still, Mr Lowe also said business investment outside mining is the "missing ingredient" in the economy's adjustment.
National Australia Bank Ltd., the country's biggest lender to business, said last month it's planning to expand market share and hire 200 new bankers to support growth.