boom fuels talk of campaign rate rise

Boom fuels talk of campaign rate rise
Michael Harvey From: Herald Sun July 09, 2010 12:00AM

CHANCES of a mid-election interest rate rise are rising after prodigious jobs growth confirmed the economy's world-beating strength.

Nearly 46,000 new jobs were created in June - tripling economists' predictions - as the unemployment rate hit an 18-month low of 5.1 per cent.

That's close to the technical definition of "full employment", raising fears that wage pressures could strike inflation and force the Reserve Bank of Australia to tighten its official cash rate.

The next scheduled RBA board meeting is on August 3 - potentially in the middle of the election campaign if Prime Minister Julia Gillard opts for a late August poll. RBA governor Glenn Stevens is no stranger to lifting rates in the heat of campaigning, having previously raised the cash rate during the 2007 campaign.

The central bank kept rates on hold this week, but the potential clincher will be inflation figures due out later this month.

Better than expected data from the Australian Bureau of Statistics yesterday illustrated how Australia's economy continues to defy global gloom. Of the 45,900 jobs created in June, 18,400 were full-time and 27,500 were part-time. It was the 10th successive monthly increase in the number of people in full-time employment.

Federal Treasurer Wayne Swan described the figures as "stunning" vindication of the Government's policies to repel the worst effects of the global recession.

"Compare this to what is happening to other countries with unemployment rates of 9 per cent in the United States and elsewhere in Europe," Mr Swan said.

Employment Minister Simon Crean stressed the benefits of more Australians having jobs.