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Unemployment rose to a four-year high in August, but a strong housing market is likely to break the downward spiral.
According to the Australian Bureau of Statistics (ABS), the national unemployment rate hit 5.8 per cent last month, with effectively 10,000 fewer jobs than in July.
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Speaking with The Adviser, chief economist at ANZ Ivan Colhoun said he expects results over the next six months to remain soft.
“We’re seeing a number of conflicting indicators,” he said. “The positives include the housing market witnessing a strong recovery, interest rates at record lows, a low Australian dollar and the overall global outlook much brighter.
“However, consumers are remaining cautious and mining investment is weakening, which are both dragging growth downward.”
The results come in the same week that ANZ's own job advertising report saw a downward trend in predicted labour force growth.
Mr Colhoun forecasts that the unemployment rate will reach six per cent or higher in 2014. However, he added that a burgeoning property market will break the cycle.
“The housing market will build even more steam, especially in NSW, and within 12 to 36 months things will be looking a lot more positive,” he claimed.
The poor figures caused a drop in the Aussie dollar, which fell from 93.54 US cents to 92.72 US cents immediately after the results were released.
The results may provide further scope for the Reserve Bank of Australia to cut the cash rate at its monthly board meeting.
