Business

Australian unemployment rate falls to a two-year low

A labourer welds steel bars
Image caption Australia is a shortage of skilled labour keeping employment numbers high

Australia's unemployment rate has fallen to its lowest since December 2008, easing concerns that twin natural disasters early this year may slowdown growth.

The jobless rate fell to 4.9% in March, according to the latest data released by the Australian Bureau of Statistics.

The bureau said that 37,800 people were added to the Australian workforce in March.

The Australian dollar rose to fresh 29-year high in wake of the jobs report.

It was trading at $1.0489 against the US dollar.

Analysts say that the latest numbers are better than the market had forecast.

"Employment growth over the past year has actually exceeded the growth in the civilian population," said David De Garis of National Australia Bank.

"It shows the employee has some inherent strength, though I would assume some slowing in the next three months," he added.

Rate hike

On Tuesday, Reserve Bank of Australia said that it will keep interest rates unchanged at 4.75%.

However, analysts say that as the economy recovers from the impact of the flooding and cyclone that hit Australia this year and gather pace again the central bank may be forced to raise the cost of borrowing again.

They say that the rising employment numbers and a shortage of skilled labour will see an increase in wages which will put pressure on consumer prices.

"The jobs machine just keeps on rolling at rapid rate," said Michael Blythe of Commonwealth Bank of Australia.

"I think this is the most convincing indicator about the strong outlook and I think it will also be a little bit of an antidote to consumer caution," he added.

"It's one of the reasons why rates will have to go higher at some point."

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