Bond market declares Phil Lowe a very bad liar

Advertisement

It is amusing watching Australia’s worst economic forecaster, the Reserve Bank, struggle desperately to bend reality to its will. Governor Phil Low palavering in Parliament Friday:

Taken together, these data are consistent with our view that wages growth and inflation will pick up gradually over the next couple of years as the labour market continues to tighten. This tightening is evident in a number of indicators. The number of job vacancies, as a share of the labour force, is at a record high. Firms are reporting that it is harder to find workers with the necessary skills, and survey-based measures of hiring intentions remain positive. In our liaison program we also hear reports of larger wage increases for certain occupations where workers with the necessary skills are in short supply. We expect that we will hear more such reports over time.

Even so, the pick-up in wages growth is still expected to be fairly gradual. We still have some spare capacity in the labour market, including part-time workers who would like more hours. There are also structural factors at work, arising from technology and competition that we have discussed at previous hearings.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
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.