Unemployment has continued to rise, but at a slow pace favoured over a sharp jump, according to economists. The slight rise in the month of November to 5.3 percent reflected a weakening global economy and softening hiring intentions.
“A modest rise in the unemployment rate is in line with RBA [Reserve Bank] and Treasury forecasts and will take some pressure off wages and inflation, allowing the RBA to ease policy at a modest pace,” said Paul Bloxham, chief economist at HSBC. “We expect further rate cuts in Q1, as the global economy slows, but for rates to stay well above emergency levels.”
In addition to the upward curve of unemployment, total hours worked fell by 0.7 percent in November but are up 0.8 percent in the year-on-year comparison.
Although the pace of the increase in hours worked has changed, Bloxham remarked, the figures indicate that employers are reluctant to take on new staff, instead relying on existing employees to work more hours.
Overall, “the Australian labour market is easing at a measured pace, which is gradually helping to take the pressure off wages and inflation, and allowing the RBA to also cut rates at a modest pace,” said Bloxham.
“While employment growth has slowed, this has happened at a time when population growth has also weakened, which has meant the unemployment rate has only risen modestly. In fact, the level of the unemployment is still relatively low in historical terms.”