Employment data adds to inflationary pressures

The Australian unemployment rate fell to a 33 year low of 4.2% as 39,400 new jobs were added. Economists were expecting around 10,000 new jobs to be added. It should be noted that the RBA has been fiddling with their methodology for compiling the data which could account for some of the fall in the unemployment rate. Regardless the result is a strong one considering more than 66,000 full-time jobs were added.

No doubt today's result coupled with yesterday's GDP number is fueling inflationary concerns, the currency and bond markets are now pricing one in. However the RBA will need to see some evidence that the robust figures of the last two days are feeding into prices. Some economists are predicting a rate rise as early as next month. Personally I think the RBA will need to see at least a couple of months of data to confirm that the inflationary genie is trying to escape the bottle before hiking rates.