Jobs WTF? Get Bloxo on the line!

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From the SMH:

Unemployment has jumped to the highest level in more than 10 years, following a surprise fall in jobs growth.

…It is the first time since 2007 than Australia’s unemployment rate has been higher than the US, which sits at 6.2 per cent.

“There’s no question, this tells us the labour market is weak,” HSBC chief economist Paul Bloxham said.

It was worth keeping in mind though that the Reserve Bank of Australia had been expecting the unemployment rate to continue to rise, Mr Bloxham said.

“We don’t see this as the beginning of a sharp deterioration; we think this is just a continuation of the previous upward trend in the unemployment rate,” he said.

The surprise uptick in unemployment is unlikely to move the RBA to cut interest rates again, Mr Bloxham said.

Perhaps, though I still reckon they will. One thing is certain, the RBA won’t be raising rates in the fourth quarter of this year, as Bloxham forecast early this year. Nor will they be raising them in the first quarter next year, as Bloxham is now forecasting. Nor is there an ice-block’s chance in Hell of four rate hikes next year, as he also currently foresees, which he acknowledges today in his employment round-up:

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While a weaker labour market clearly increases the likelihood that the RBA could deliver further rate cuts, we still see this as unlikely given that monetary policy is already very accommodative and the housing market is already booming. However, a weaker labour market is likely to take further pressure off wages growth, which could put downward pressure on inflation in the medium term. While we remain of the view that the RBA are unlikely to cut rates further, the clear risk is that they may be on hold for longer than previously expected.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.