Talk of a robust economy, buoyed by the continuing mining boom and a surge in jobs growth, has kept analysts on their toes when it comes to predictions of the next rate rise from the Reserve Bank. But recent jobs figures have painted a picture of an economy that is actually weaker than it may appear.
Queensland employment was the hardest hit in the wake of the floods and Cyclone Yasi, with the workforce down by 22,000 workers in February compared to the previous month. All job losses were in the part time sector as struggling employers slashed their casual labour force. Most of these newly unemployed held off from seeking alternative employment, causing a sharp decline in the participation rate.
According to a report in The Australian, the job losses experienced in Queensland outweighed a small increase in other states, causing the national workforce to drop by 10,100, while the jobless rate held steady at 5% across the country.
Although this represents a small fall in an otherwise healthy employment sector, economists believe it is enough to keep the RBA from making a move to up the official cash rate before the second half of the year, with some now forecasting an increase as late as August.
According to Westpac senior economist Justin Smirk, it will be well into the third quarter of this year before the central bank was likely to have a good case for lifting interest rates.
“The RBA has been given some breathing space to sit on the sidelines and watch the data flow,” he said.
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