Australia’s jobless rate drops to 33-year low

The unemployment rate in Canberra dropped to a fresh 33-year low of 4.1 per cent in January, fueling speculation of another interest rate hike.

The unemployment rate fell to a seasonally-adjusted 4.1 per cent in January compared with 4.3 per cent in December and surpassing last September’s 4.2 per cent trough, data released today by the Australian Bureau of Statistics (ABS) shows.

The fall came as a further 26,800 jobs were created in the month, although full-time employment fell by 7,800.

Economists had expected total employment to rise by 15,000 and a steady jobless rate of 4.3 per cent.

The Reserve Bank of Australia (RBA) has repeatedly said a tight labour market risked fuelling wage inflation.

The central bank forecast earlier this week that underlying inflation – already at a 16-year high – will rise further in coming months.

It expects the inflation rate will moderate thereafter, but stay at or above the top of the bank’s two-to-three per cent target range until June 2010.

Such was the central bank’s blunt warning on the inflation outlook and its expectation that interest rates will likely have to rise again, economists generally think it will lift rates next month.

They also expect another rate rise could be coming in May after the next set of official inflation figures on April 23.

Last week’s rate rise marked the 11th consecutive increase since May 2002.

– AAP