Australian Employers Unexpectedly Add 1,200 Workers

By Jacob Greber and Gemma Daley

Feb. 12 (Bloomberg) -- Australian employers unexpectedly added workers in January, a sign the economy may avoid a recession that is gripping the U.S., U.K., Europe and Japan.

The number of people in employed gained 1,200 from December, the statistics bureau said in Sydney today. The median of 17 economists surveyed by Bloomberg was for a drop of 18,000.

The currency rose as traders bet rising employment may ease pressure on central bank Governor Glenn Stevens to extend four percentage points of reductions to the benchmark interest rate, which was cut last week to a 45-year low of 3.25 percent. The jobless rate rose to 4.8 percent from 4.5 percent, the highest since June 2006, as more people looked for work.

“We haven’t seen jobs shedding take hold yet, and that’s fantastic news,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “Things aren’t as bad as some of the rhetoric and press is telling us and companies are saying ‘our bottom lines are okay, and we’re unwilling to give up labor’.”

Even so, “we can’t sit here and delude ourselves that things will be okay,” he added. “Jobs destruction will kick in.”

The Australian dollar rose to 65.70 U.S. cents at 12:36 p.m. in Sydney from 65.20 cents immediately before the report. The yield on the benchmark two-year government bond rose 1 basis points to 2.61 percent. A basis point is 0.01 percentage point. The benchmark S&P/ASX 200 stock index rose 2 percent to 3,545.40.

Full-Time Jobs

The number of full-time jobs surged 33,700 in January and part-time employment decreased 32,600, today’s report showed. Some 10.7 million people were employed last month, equal to about half the nation’s population.

Unemployment is rising around the world. The U.S. jobless rate soared last month to 7.6 percent, the highest level since 1992, while U.K. unemployment rose to the highest reading in almost a decade. Japan’s rate climbed in December to 4.4 percent from 3.9 percent.

“The labor market shake-out in the U.S. and U.K. is not evident in Australia, not least because the economic downturn remains mild,” said John Edwards, chief economist at HSBC Bank Australia Ltd. in Sydney. “It will contribute to the case for the Reserve Bank to pause in March.”

The central bank has reduced borrowing costs five times in the last six months, helping fuel a surge in home-loan approvals which jumped in December by the most in almost nine years, a report showed yesterday.

Cash Handouts

Prime Minister Kevin Rudd is also trying to stoke growth by pledging to spend A$12.7 billion ($8.3 billion) on cash handouts to low and middle income earners from next month and A$28.8 billion on infrastructure.

“It underscores that with a well-capitalized banking system, a functioning monetary policy, a loose fiscal policy and a floating currency, Australia doesn’t have to endure the extent of deleveraging seen in other countries,” said Ashley Davies, a UBS AG currency strategist in Singapore.

Still, the “general sense in the market is that Australia will at some stage endure a significant downturn,” Davies added.

Recent reports show business confidence tumbled in January to a record low, consumer confidence declined this month and advertisements for job vacancies slumped for a ninth month in January.

The central bank last week said Australia’s jobless rate will “increase materially over the year ahead” as falling prices for resources, including coal and iron ore, trigger a 20 percent drop in earnings from exports.

Global Demand

“There’s no doubt, given what’s happened in the global economy, that unemployment is moving upwards in the world and we’re not immune from that,” Treasurer Wayne Swan told Australian Broadcasting Corp. radio today.

“We can see the drop in global demand and we can see that being transmitted to this country.”

BHP Billiton Ltd., the world’s largest mining company, said last month it will cut 3,400 jobs in Australia as it shuts a nickel mine, closes part of a refinery and reduces coking coal output by as much as 15 percent amid slowing demand from China, Australia’s largest trading partner.

China’s exports fell last month by the most in almost 13 years, tumbling 17.5 percent, as demand dried up in the U.S. and Europe, a report showed yesterday.

Macquarie Group Ltd., Australia’s largest investment bank, shed about 1,000 employees since September, and furniture and electronics retailer Harvey Norman Holdings Ltd. has said it will close five stores before the end of June.

Participation Rate

Economic growth in almost all of Australia’s major trading partners, including China, Japan and the U.S., will be at least 2 percentage points below trend rates in 2009, the Reserve Bank said on Feb. 6.

“This would represent the most synchronized downturn in Australia’s trading partners since the mid-1970s,” the bank said.

The participation rate, which measures the labor force as a percentage of the population aged over 15, rose to 65.1 percent in January from 65 percent, today’s report showed.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.netGemma Daley in Canberra at gdaley@bloomberg.net