A second successive strong jobs report gave the Australian dollar a boost on Thursday and pushed back the prospect of a rate cut, allaying fears about the economy but exerting pressure on the country’s main stock index.
The currency rose by as much as 1.5 per cent to $0.7333 after the data.
The creation of 71,400 jobs last month took the unemployment rate down to 5.8 per cent, a 19-month low, and confounded expectations of overall job losses and a reading of 6 per cent on the jobless rate.
It even outshone October’s surprisingly strong report, lengthening the odds of a rate cut any time soon.
“November’s labour market data are either a major mirage or a minor miracle,” said Paul Dales, economist at Capital Economics.
“We think that the truth lies somewhere in between, with conditions improving but not quite as much as the figures suggest.”
He noted that the Australian labour market has a “history of wild moves” but also that the longer-term average indicated an improving picture, with job losses in the mining sector being offset by jobs creation elsewhere.
Annette Beacher at TD Securities was approaching the data with a sense of caution. “We are sceptical that a sub-trend economy with shrinking domestic demand is generating jobs at a pace this year that is literally multiples of recent years.
She went on to call the level at which the Australian dollar was now trading as “uncomfortable” for the Reserve Bank of Australia, especially “where key commodity prices are trading just now” — with weak metals prices and a strengthening Aussie dollar an unwelcome combination for the country’s basic resource exporters.
Nonetheless, mining shares were able to rise after the steep run lower for the sector looked to have taken them far enough for the time being. BHP Billiton’s Sydney-listed stock recovered 1.9 per cent and Rio Tinto rose 2.4 per cent.
Shares in banks were lower, as the prospect of looser monetary policy faded. National Australia Bank fell as much as 3.1 per cent, while ANZ and Westpac each lost as much as 2.5 per cent. Overall, the S&P/ASX 200 fell 0.8 per cent to 5,037.71 — its lowest level since mid-November.
Additional reporting by Michael Hunter in London
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