Banks differ on fate for unemployment

by Adam Smith11 Apr 2012

Major bank economists have diverged on the future for employment, as one predicts the jobless rate to reach 5.5%.

NAB and ANZ have painted different pictures for the labour market. While ANZ's Job Ads series said employment advertisements rose 1% in March, foreshadowing stronger labour growth, NAB has predicted flat growth for the first quarter of the year.

NAB suggested that employment would remain flat, with only modest growth in the second quarter of 2012. As a result, the bank has forecast near-term unemployment to reach 5.5% by mid-year. NAB said employment is set to pick up in the latter half of the year, with the jobless rate falling to 5.25% by year's end.

ANZ, meanwhile, predicted a modest recovery in employment growth. Chief economist Warren Hogan said the jobless rate would remain below 5.5% throughout the year "despite potential divergences between regions and industries". With an outlook for strengthening employment, Hogan said the scope for further RBA cuts beyond an anticipated cut in May is limited.

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