/www.bloomberg.com/ Sydney, Feb. 13 (Bloomberg) -- Australia unexpectedly added the most jobs in 11 1/2 years in January as the central bank said rising business spending is supporting the economy during the worst drought in a century.
The economy added 111,000 jobs, the Australian Bureau of Statistics said. Economists surveyed by Bloomberg News expected 10,000 positions to be lost. The jobless rate fell to 6.1 percent from 6.2 percent in December.
Central bank Deputy Governor Glenn Stevens said today rising profit and low debt levels will encourage companies to invest more, allowing the economy to expand at a ``respectable'' pace after growing about 4 percent last year. Companies hiring include General Motors Corp.'s Holden unit and Wesfarmers Ltd. at its Bunnings home improvement stores.
``We'd expect to increase numbers because the Bunnings chain continues to expand and we take on over 1,000 people there every year,'' Chief Executive Michael Chaney said in an interview.
Economists and investors say today's jobs report means there is little room for the central bank to cut its benchmark interest rate from 4.75 percent even as drought slashes Australia's harvest by 20 percent, cutting export revenue.
``Job growth is unexpectedly strong and it suggests the economy is doing quite well,'' said John Honan, who manages about A$300 million ($177 million) of fixed-income securities at Ausbil Dexia Ltd. ``Any expectations of an easing are on hold.''
Full-Time Jobs
The economy added 72,400 full-time jobs in January, following a gain of 49,500 in December. Part-time employment rose 38,600 following a 2,500 increase in December.
The total monthly employment gain was the highest since a record 124,500 jobs were added in August 1991. Almost 9.5 million of Australia's 20 million people now have a job, the most on record.
The so-called participation rate, which measures the proportion of people with jobs or looking for work, rose to a record 64.7 percent from 64.2 percent in December. All figures are seasonally adjusted.
The Bureau of Statistics said it is in the process of introducing a new sampling for the job series, which may have significantly increased volatility in the series.
The yield on the government 10-year bond maturing May 2013 rose as high as 5.21 percent from 5.16 percent before the report. It closed at 5.16 percent, a drop of 4 basis points, or 0.04 percentage point, from yesterday. A basis point is 0.01 percentage point.
``The market was premature on pricing in an easing,'' in interest rates, said Kieran Davies, chief economist at ABN Amro Australia Ltd. ``These figures suggest the economy here still has some momentum.''
Consumer Spending
The Reserve Bank of Australia said in a quarterly report this week that consumer spending should be underpinned by rising employment, business investment and low interest rates. Exports also should contribute to economic growth.
Deputy Governor Stevens repeated that message today. ``Profits are strong and new funding is readily available,'' he told economists in Perth, the capital of Western Australia. ``Corporate balance sheets are strong, so, conditions seem conducive to further investment increases.''
General Motors Corp.'s Australian unit plans to hire 1,000 workers for its car-making plant in Adelaide, the Advertiser newspaper reported last month. Additional jobs would be created in the nation's car parts industry, the newspaper said, citing Peter Hanenberger, managing director of the company's Holden unit.
Wesfarmers, which has about 29,000 employees, said it is hiring at its expanding Bunnings chain even as it warned it may miss it full- year earnings target because the drought will hurt sales at its farm merchandise and fertilizer units.
Hiring Plans
Another company hiring is German discount retailer Aldi Group, which is seeking to sell liquor in Victoria state, pitting it against Australia's biggest retailers, Coles Myer Ltd. and Woolworths Ltd., in a A$11.5 billion ($7 billion) liquor market.
Aldi is building supermarkets in Victoria and last weekend ran full-page newspaper advertisements seeking workers. It already has stores in New South Wales and the Australian Capital Territory.
Australia's economic growth rate is expected to slow to 3 percent this year from almost 4 percent in 2002, according to a Bloomberg News survey of economists.
Economists say the pace at which the economy is adding jobs -- the January gain almost matched the 112,600 gain the previous two months -- means the central bank won't cut interest rates soon. The economy has added 315,900 jobs since January last year.
``It gives the bank little option but to leave rates steady,'' said David de Garis, senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne.
In a Bloomberg News survey last week of 18 economists, six said rates will be kept unchanged into the second half of the year, and four forecast a cut, one next month.
Five say rates will be increased a quarter point, and three are forecasting a half-point increase this year.