(Updates with comment from economist in fourth paragraph, currency in fifth.)
Oct. 13 (Bloomberg) -- Australia’s unemployment rate declined for the first time since March as employers added double the workers economists forecast, boosting bond yields and sending the local currency to a three-week high.
The number of people employed rose by 20,400, from a revised 10,500 fall in August, the statistics bureau said in Sydney today. The median estimate in a Bloomberg News survey of 24 economists was for a 10,000-job gain. The jobless rate fell to 5.2 percent from 5.3 percent.
The report prompted traders to rein in bets on an interest- rate cut next month as evidence mounts Australia’s economy is weathering global market turmoil with improved consumer and business confidence. Companies such as BHP Billiton Ltd. are hiring in Western Australia and Queensland states to satisfy China and India’s demand for coal, iron ore and natural gas.
“The latest rise in employment was certainly a welcome relief,” said Savanth Sebastian, a Sydney-based economist at Commonwealth Bank of Australia, the nation’s largest lender. “For those expecting a rate cut in November the latest employment result does muddy the waters.”
The Australia dollar has risen as much as 9 percent since it fell to a one-year low 93.88 U.S. cents on Oct. 4 after Reserve Bank of Australia Governor Glenn Stevens indicated there’s scope to cut the benchmark rate from a developed-world high of 4.75 percent. Traders see a 68 percent chance of a reduction in borrowing costs on Nov. 1, the lowest since Aug. 1, interbank cash-rate futures show.
The number of full-time jobs advanced by 10,800 in September to 8.04 million, and part-time employment rose by 9,600 to a record 3.41 million, today’s report showed. Australia’s participation rate, which measures the labor force as a percentage of the population over 15 years old, held at 65.6 percent in September, it showed.
Resource-rich states led the gains, with Western Australia adding 7,300 jobs and Queensland 4,900 workers, while the southern state of Victoria increased employment by 3,400, today’s report showed. New South Wales, Australia’s most populous state, led the declines with the loss of 1,300 jobs.
The local dollar climbed to $1.0189 as of 12:24 p.m. in Sydney, from $1.0174 before the data. The 10-year bond yield climbed 13 basis points to 4.44 percent, the biggest increase since Sept. 27.
“Recent reports strongly suggest the weaker jobs growth in the past couple of months isn’t because the economy is slowing,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s biggest interdealer broker. “Rather, employers have been cautious given heightened uncertainty in Europe.”
The RBA last week left its key rate unchanged, citing a “softer” labor market and consumers who are “more concerned about the possibility of unemployment rising.” The central bank signaled less concern about wage pressure from a mining investment boom and said there’s more scope to cut rates if necessary.
Government reports last week showed the strength of the mining industry and signaled a rebound in building approvals.
Australia’s exports surged in August to a record A$28.4 billion ($28.9 billion) on coal shipments, and the nation’s A$3.1 billion trade surplus was the second-widest on record. A separate release showed the number of permits granted to build or renovate houses and apartments jumped 11.4 percent from July, the biggest increase since March 2010.
Retail sales also advanced more than economists forecast in August for a second straight month as consumers spent more on household goods and dining out, an Oct. 5. government report showed.
The RBA increased rates by 175 basis points from October 2009 through November to its current level, compared with as little as zero in the U.S. and Japan.
The policy divergence contributed to a rise in the local dollar, which reached $1.1081 on July 27, the highest level since it was freely floated in 1983. It fell about 10 percent last month amid speculation Greece will default and spark a repeat of the 2008 credit freeze.
--With assistance from Daniel Petrie in Sydney. Editors: Brendan Murray, Garfield Reynolds
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