The Australian dollar climbed a third of a US cent after the government reported 23,400 net new jobs created in June, above a forecast of 15,000 and a rebound from a 500 drop in May.
Full-time employment surged 59,000, recovering from falls the previous two months, while the jobless rate remained at a low 4.9 percent.
The report was upbeat enough to counter worries about an economic slowdown, while not being so strong as to revive talk of an increase in interest rates.
“The numbers are clearly stronger than some of the other data we’ve been getting lately,” said Brian Redican, a senior economist at Macquarie.
“It’s definitely on the positive side of the ledger, but it doesn’t change the fact the economy is coasting along at around trend right now,” he added.
“There’s no signal here that rates need to be raised to slow things down.”
Investors seemed to feel much the same, with interbank futures only a shade lower after the data and still implying no risk of a hike in rates for months to come.
Earlier this week, the Reserve Bank of Australia (RBA) conceded the economy was now unlikely to grow as rapidly as first thought this year.
While sky-high export earnings are still fueling a massive boom in mining investment, other parts of the economy are struggling with a high effects of a high currency and a restrained consumer.
The central bank is also prepared to wait and see if a recent slowdown in the global economy proves temporary, as it expects, or morphs into something more serious.
Employment growth has slowed markedly in recent months to stand at an annual 2.0 percent in June, around the long-term average, down from a torrid peak of 3.6 pct last November.
While mining, finance and public employment remain healthy, weakness has emerged in a range of once strong hirers, including manufacturing, administration, utilities and construction.
“The over-arching trend appears to be that on signs that demand was improving through mid 2010, the bulk of the domestic cyclical sectors ‘tooled-up’ with labor,” said Scott Haslem, chief economist at UBS.
“But with activity slowing into end 2010 and early 2011, we’ve now seen jobs growth stall.”
The slowdown in employment was noted by the RBA when it left interest rates unchanged this week, and it cautioned that most leading indicators suggested the slower pace would continue in the near term.
Still, if there is a silver lining to slower jobs growth it is that it should lessen inflationary pressures.
The Australian economy is to all extents and purposes, already fully employed and a further drop in the jobless rate would have taken it to lows that have fueled wage and price pressures in the past.
With the jobless rate now more likely to stay around 5 percent for an extended period that should provide one less reason to raise interest rates again.
“The fact that unemployment rate has not dropped further keeps the pressure off them to do anything anytime too soon and that is helpful when they are watching things offshore,” said Su-Lin Ong, a senior economist at RBC Capital Markets.
