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ISCOVER
Staff Reporter
The Reserve Bank’s December rate cut could be the last one for a very long time, one economist has claimed.
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HSBC economist Paul Bloxham said new data which show the labour market is currently performing incredibly well could force the RBA to leave the cash rate on hold for some time.
According to the Australian Bureau of Statistics, employment rose by 13,900 jobs in November and the unemployment rate fell back to 5.2 per cent.
In addition, aggregate hours worked rose in the month and so may have passed their cyclical trough.
“We continue to expect the unemployment rate to stay in the low fives and to see further signs of growth rebalancing over coming months, given that mortgage rates are now well below their average level,” Mr Bloxham said.
“As such, we think Tuesday's RBA cut could be the last in this easing phase. The global cycle seems to have stabilised, with China bottoming out. We expect Chinese growth to pick up next year from 7.8 per cent to 8.6 per cent, which should provide support for commodity prices.
“Locally, we are seeing early signs that below-average interest rates are starting to support housing construction, house prices and consumer sentiment. Looking forward, we expect to see further rebalancing of Australia’s growth.
“Our one big concern was further deterioration of the labour market. Today’s report helps to neutralise that concern, at least for the moment.”
