Jobless numbers could trigger rate cut
By
Adam Smith
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9/09/2011 2:45:00 AM
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Australia has seen a slight rise in unemployment, which could put pressure on the RBA to cut rates.
The jobless rate has increased 0.1% to 5.3% for August. The decrease in employment was driven by a fall in full-time employment as the economy shed 9,700 jobs. The fall was partially offset, however, by a 2,900 person increase in part-time employment. Underutilisation also rose in August, up 0.1% to 12.3%.
In its cash rate decision this week, the RBA Board commented that reports of skills shortages had been largely confined to the resources sector. Westpac economist Bill Evans had predicted last month that Australia would see steadily rising unemployment in the first half of 2012. Following the release of the ABS figures, Westpac economist Justin Smirk said the bank's previous unemployment forecasts may have been too conservative.
"Prior to today our forecast was for the unemployment rate to rise to 5.5%. On current trends, that looks conservative and 5.75% is an entirely plausible outcome," Smirk said.
This trend, according to Smirk, will force the RBA to reconsider its outlook for employment.
"The RBA can no longer describe jobs as 'firm' or the unemployment rate as 'near 5%'," he commented.
Evans argued that the case for a rate cut was growing, with an "anaemic read on credit growth" released this week by the ABS, and RP Data - Rismark figures showing a 3.7% year-on-year decline in property values.
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