From the SMH comes the ship of fools:
ANZ economist Riki Polygenis
While new labour demand is holding up, it is not enough at present to offset retrenchments in particular industries such as mining and manufacturing or to keep up with the flow of new workers into the economy.
For monetary policy, today’s figures are more consistent with the RBA’s revised forecasts for the unemployment rate to rise further and to stay elevated for an extended period. We expect a further rate cut in H1 2015, most likely at the next board meeting in March. We will receive more colour on this when governor Glenn Stevens speaks to the House of Representatives Standing Committee on Economics tomorrow morning.
RBC Capital Markets senior economist Su-Lin Ong
There is an element of payback from a strong December and reasonably firm quarter. Weakness concentrated in full-time jobs and the unemployment rate looks like heading back upward. It is a soft labour market and fits more broadly with the sub-par pace of growth, the weakening in domestic demand and what is a probably challenged outlook for the economy.
We see a fairly sticky jobless rate in the 6.25-6.5 per cent range. The report sits with the (Reserve Bank of Australia) easing bias. We have the next cut in May. Numbers like this suggest the risk is sooner but I don’t see any new news with these numbers.
CBA economist Diana Mousina
The employment numbers were a little weaker than consensus but the shocking part of the numbers was the strong lift in the unemployment rate to 6.4 per cent.
We think it’s a clear sign that the RBA will change the cash rate to 2 per cent in March. Their forecast has been for unemployment to peak at 6.5 per cent in mid-2016 we think there’s a chance that now the unemployment peak will be a little bit higher.
TD Securities head of rates strategy Annette Beacher
This report follows three consecutive “stronger than expected” prints, and the RBA Board is highly unlikely to react to “one report”. While the smoothed employment profile is +25k (3mma, a fairly healthy pace) the u-rate trend is not pretty with 6.4 per cent a 14yr high.
The recent RBA statement of monetary policy clearly stated that the Bank expects the unemployment rate to be higher for longer, so this report remains within the bounds of prior expectations. Another step down in employment and a jump in the u-rate past 6.5% is another matter. Wait and see is prudent here.
NAB economist David de Garis
It brings the numbers back to the trend that most people would have expected the labour market to portray. We know that job advertisements and some other leading indicators suggest that there is some employment growth, but that was overstated, particularly in the December numbers, so we’ve got some payback from that.
We’ve still got employment growth but not enough to cap the unemployment rate unfortunately. The headlines are obviously pretty negative and the market’s reacted quickly to that so it’s probably a bit of an overraction in the short term. But it’s very much the thematic the RBA applied when they cut rates.
Very good. Couldn’t be that the immigration backfill strategy can’t lower unemployment because every person added to the economy contributes less to demand than they take away in productivity destruction for everyone already here, could it?
I’m finding the work of Annette Beacher especially entertaining, with her focus on the looming inflation breakout and three rate hikes coming from year end.
Lock in rate cut number 11 for the cycle at March meeting.
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.
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