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Loan rates up as jobs surge

SURGING employment growth is continuing unabated, underlying the economy's strength and maintaining pressure on the Reserve Bank to consider another rise in interest rates after last month's 0.25 per cent rise.

The unemployment rate in February held steady at its 30-year low level of 5.1 per cent, while the number of people with jobs increased by 20,000 to 9.9 million people.

The unexpected lift in employment led several economists yesterday to foreshadow another increase in interest rates next month.

Treasurer Peter Costello hailed the result, saying it showed there was still some strength in the economy.

"There is still some oomph there because you are seeing it in relation to the creating of jobs, 20,000 in the month of February," he said.

Mr Costello said it raised to 325,000 the number of jobs created over the past year.

He said, however, that he believed the demand in the economy was now slowing, as was the housing cycle, and it would be unreasonable to expect similar jobs growth in the year ahead.

The employment growth in February was driven by new full-time positions. These rose by 37,000 while there was a fall in the number of part-time positions. It follows a 46,000 increase in the number of jobs in January and 28,100 new jobs in December.

"The jobs data helps bolster our view that the Reserve Bank is likely to lift official rates by 0.25 per cent in the coming months," said Commonwealth Bank chief economist Michael Blythe. He expects the next increase to be in May, following the release of the next consumer price index.

Mr Blythe said the strength of employment provided an antidote to the slump in consumer confidence which had followed the increase in rates last month.