From the Shadow:
Official economic growth figures for the second quarter found the Australian economy grew by 0.8 per cent in the three months to June, and 1.8 per cent for the year, rebounding from 0.3 per cent for the first quarter of 2017. Combined with favourable employment figures and an improved outlook for the global economy, the case for increasing the cash rate in the future is building. However, for this month the RBA Shadow Board continues to advocate a hold-and-wait policy. It attaches a 60% probability that this is the appropriate setting. The confidence attached to a required rate cut equals 6%, while the confidence in a required rate hike equals 39%.
Figures released in September found Australia’s seasonally adjusted unemployment rate held steady at 5.6%, according to the Australian Bureau of Statistics, but with more than 54,000 new jobs created in August, of which 40,000 were full-time. The labour force participation rate rose for the sixth consecutive month, from 65.1% to 65.3%, preventing the increase in jobs from lowering the official unemployment rate. The responsiveness of labour force participation to the creation of job vacancies, along with unremarkable productivity growth, helps keep a lid on wages growth and thus on overall inflation. Eventually, the growing tightness of the labour market ought to spill over into higher wages.
