The tilt in monetary policy has just moved decisively towards further rate rises, after the strongest jobs performance for three years years was revealed in the January labour force figures today.

Figures from the Australian Bureau of Statistics showed that more than 52,000 jobs were created last month, with the rate falling to 5.3% from the surprise 5.5% set in December. The unemployment rate is now back where it was in February of last year.

The ABS said that was the biggest increase since December, 2006, as the last boom was gathering strength. It takes the number of new jobs since last September, when the rebound started, to well over 180,000.

Most market forecasts had 15,000 or so jobs pencilled in for January, with the rate either steady, or easing upwards top 5.6%.

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The labour market is bounding ahead and it’s now very clear the jobless rate in this country in the 2009 slowdown peaked at 5.8%, a level a few years ago many economists would have thought close to full employment.

The Reserve Bank sat on its hands at its February meeting, the first for 2010. It got confirmation this morning that the labour market isn’t slowing, despite the three rate rises.

The news will set off alarm bells at the RBA. Only last Friday, the bank picked out a rapidly tightening labour market as a risk to recovery, saying:

Perhaps the most likely scenario in which growth and inflation are both significantly higher than expected is one in which confidence continues to build on the back of a further pick-up in commodity prices and there is a larger increase in investment in the resources sector than currently expected. In this scenario, non-residential construction might also pick up more quickly than is currently expected as credit constraints ease.

If this were to occur, capacity constraints, particularly in the construction sector, would be likely to emerge and wage growth would be likely to accelerate more quickly than currently expected. The result would be higher inflation.

Yesterday, BHP Billiton CEO Marius Kloppers complained that his company was already seeing evidence of this.

“We are concerned about skill shortages,” Kloppers told analysts in a conference call. “To be frank with you, those skill shortages, particularly in Western Australia and certain skill segments, have come a little bit more quickly than even we anticipated.”

The ABS said the rise in employment “was driven by a rise in part-time employment, up 36,900 to 3.314 million together with a rise in full-time employment, up 15,900 to 7.652 million.”

“For the third consecutive month, the ABS reported the number of people unemployed had decreased, down 22,300 persons to 612,000 in January. The ABS seasonally adjusted monthly aggregate hours worked series showed a fall in January, down 14.8 million hours to 1518.1 million hours. The participation rate in January remained at 65.3 %.”