While many economists expect interest rates to remain on hold until Q4 2011, strong growth in the Australian job market may force the Reserve Bank to move sooner rather than later.
According to the latest ANZ Job Advertisement Series, total job advertisements increased for the eleventh consecutive month, with the number of jobs advertised on the internet and in newspapers rising by 1.3 per cent in March – up 19.2 per cent on the previous year.
ANZ’s head of Australian economics and property research Ivan Colhoun said the Australian job market is continuing to grow, with the annual growth in job advertising well above its long term-trend.
“This strong rate of growth reflects job advertising is returning to more normal levels after being depressed in 2009,” Mr Colhoun said.
Over the coming month, ANZ anticipates a rise in employment of 24,000 and a slight decline in the un-employment rate to 4.9 per cent
But even if the unemployment rate falls this month, Mr Colhurn said the RBA will more than likely keep the cash rate on hold at 4.5 per cent.
“A broadly stable unemployment rate, as has occurred in recent months, is indicative of an economy growing around trend.
“This should not generate significant broad-based wages or inflationary pressure and would be consistent with the RBA retaining an unchanged interest rate setting for some time,” he said.
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