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 Hopes for cut in interest rates recede as jobs grow 

Hopes for cut in interest rates recede as jobs grow

07 Aug, 2008 06:25 PM
Australia added more jobs than were expected, in July, even as economic growth slowed, raising doubts the Reserve Bank will cut official interest rates next month, despite rising expectations of a rate cut.

Employers added 10,900 jobs last month, seasonally adjusted, compared with almost 30,000 previously reported for June, according to the Australian Bureau of Statistics.

Economists surveyed by Bloomberg tipped the labour force grew by 5000 jobs in July.

The net job number, though, masked a big gain in full-time positions, which swelled by 53,700 last month, eclipsing the loss of 42,800 part-time jobs.

"You've had advertising demand and activity falling away but you haven't seen too much attrition in the job market," said NAB economist, David de Garis, before the numbers were released.

"Companies at this stage would still be holding on to staff," he said.

"It's only been a matter of months since companies were aggressively trying to recruit people.

"In fact, some companies are still trying to do that."

The unemployment rate last month was 4.3pc, compared with 4.2pc at the end of June, remaining at three-decade lows.

The total number of employed rose to 10,718,800 from 10,712,900 in June while the participation rate remained unchanged at 65.3pc.

The stronger-than-expected jobs figures come amid a backdrop of softening economic data released in recent weeks.

Last week, retail sales - a key gauge of consumer activity - came in weaker than expected.

Home loans and consumer confidence figures have also slumped in past weeks.

Earlier this week, the RBA said the "scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing,'' comments widely interpreted to mean the central bank is poised to cut the official interest rate when its board meets on September 2.

The RBA also said it saw "some early signs of an easing in labour market conditions.''

The market will know more about the Reserve Bank's outlook for the economy when it releases its quarterly monetary policy statement on Monday.

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