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Steven Cross
Soft labour numbers released by the Australian Bureau of Statistics will put more pressure on the Reserve Bank to cut the cash rate.
According to ABS data, Australia shed 27,000 jobs in June, lifting the unemployment rate by 0.1 per cent to 5.1 per cent.
Speaking with The Adviser, NAB economist Alexandra Knight said the slight increase in unemployment is building the case for more interest rate cuts.
“In itself, it’s not enough to make the RBA move, but we are expecting a rate cut in September, and this just adds to the case for the lowering of the cash rate,” Ms Knight said.
While the soft labour market will be a factor in the RBA’s September rate decision, Ms Knight said the next set of CPI results, released at the end of this month, will ultimately provide the RBA with the information they need to make a decision.
“We’re more looking towards the June quarter CPI results out later this month, so if that comes in soft that might help them build confidence to cut. We’re forecasting a 25 basis point cut in September,” she said.
“The RBA is comfortable with rates at the moment and we believe they are taking a wait and see approach to see if there is more softness in the economy.”
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