Having missed every signal under the Sun for as far back as I can remember:
Rates Should Stay on Hold Into the New Year
The unemployment rate ticked up to 5.3% in October, while real wage growth fell further, to 0.5%. Australia’s inflation rate, at 1.7% in the September quarter, remains below the Reserve Bank of Australia’s official target range of 2-3%. The RBA Shadow Board’s conviction that the cash rate should remain at the low rate of 0.75% equals 45%, while the confidence in a required rate cut is 20% and the confidence in a required rate hike 35%.
Based on ABS figures for October, the seasonally adjusted unemployment rate in Australia inched up to 5.3%, coinciding with another small drop in the labour force participation rate to 66. Both full time and part time employment fell; on a net basis the economy lost 19,000 jobs in total. Wages growth data, released a fortnight ago, confirmed expectations of weakness: nominal wages grew, year-on-year, by 2.2%, or, given the current inflation rate of 1.7%, by 0.5% in real terms. In light of slow output growth, sustained weak wages growth is a major concern for a policy makers. Without a considerable pickup in wages growth to prop up consumption spending, and thus overall aggregate demand, economic activity is likely to stay muted, or slow further.
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