Jobs growth takes swipe at effort to keep a lid on rising dollar
Better than expected April jobs figures have undermined the Reserve Bank's efforts to deflate the rising dollar with signs the economy was experiencing pockets of strong growth.
The currency surged half a cent to trade at just over US$1.024 late on Thursday, after Bureau of Statistics data showed the unemployment rate had fallen to 5.5 per cent.
At these levels the dollar is back to the value it held just before the central bank's decision on Tuesday to cut official cash rates.
Economists said last month's bounce in the labour force data, which showed the economy had added 50,100 jobs as the participation rate lifted to 65.3 per cent, reduced the likelihood that the RBA would step in to cut rates again next month.
Significantly, it was weak March jobless figures that were a key factor behind the central bank's decision to take the cash rate down to its lowest level in half a century.
But the Reserve Bank's decision was also driven by an attempt to take the heat out of a currency that has remained mostly above parity against its US counterpart since early 2011, and which has put the squeeze on export industries.
Currency strategists said the rebounding Australian dollar reflected the extraordinary circumstances the global economy was facing at this time.
"[The RBA] are well aware that they have spent 18 months cutting rates by 200 basis points and the currency is actually stronger in trade-weighted terms than it was before they started," Westpac senior currency analyst Sean Callow said.
"They understand that these are extraordinary times as far as interest rates are concerned and you are not going to get the same response to lower rates that you have in previous eras."
There were 34,500 new full-time positions and the economy added 15,600 part-time jobs last month, Bureau of Statistics data shows. In NSW, the jobless rate fell to 5.3 per cent from 5.5 per cent.
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