From the RBA Shadow today:
Australia’s economic outlook remains mixed. The unemployment rate unexpectedly fell to 5.5%, while headline inflation remains well contained. On the other hand, household debt continues to break new records, raising concerns about a possible housing crash in the major capital cities. The RBA Shadow Board continues to advocate a hold-and-wait policy. It attaches a 59% probability that this is the appropriate setting. The confidence attached to a required rate cut equals 2%, while the confidence in a required rate hike equals 39%.
Economic growth for the March quarter was 0.3 per cent, for a sluggish annual growth rate of 1.7 per cent. Headline inflation, which increased to 2.1% in the March quarter, lies comfortably within the Reserve Bank of Australia’s official target range of 2-3%. Australia’s seasonally adjusted unemployment rate unexpectedly dropped to 5.5% in May, according to the Australian Bureau of Statistics, with the economy adding more than 52,000 full-time jobs. The labour force participation rate remains virtually unchanged at 64.9%, along with the youth unemployment rate, which equals 12.7%. Weak nominal wage growth of under 2% continues to be a concern, with no signs of any industries experiencing significant wage pressure.
