The unemployment rate rose during December to 5.4% according to figures released yesterday by the Australian Bureau of Statistics, but don’t pencil in another rate cut just yet.
The Australian Retailers Association has already seized on the figure to call for another rate cut from the Reserve Bank of Australia as it claims retailers won’t be able to cope with the increased consumer reticence brought about by reduced employment levels.
“The increase in unemployment is the first and most palpable sign Australians will retreat further away from spending amid fears for their own jobs, not to mention rising taxes, utility costs and the cost of living,” ARA chief executive Russell Zimmerman said.
“The ARA is calling on the RBA to ensure a rate cut is made in February along with banks and urging both major political parties pursue an economic reform agenda in the lead up to the federal election.”
But it’s unlikely that either the RBA is going to cut rates on the basis of the latest figures or the government will alter its policies.
The truth is an unemployment rate of 5.4% sits largely in line with economists’ expectations.
For the government’s part, it’s blaming the global economy for the increase with Kate Ellis, the acting minister for employment and workplace relations, claiming yesterday “Australia’s labour market remains resilient in the face of uncertainties in the global economy”.
Ellis also reminded Australians our unemployment rate remains one of the lowest in the industrialised world.
As for the Reserve Bank, the latest figures are unlikely to make any difference to the approach it has being taking.
While the ARA thinks the latest figures are a “neon sign” for a rate cut, don’t hold your breath. The RBA had already factored in unemployment figures of around these levels and that’s why it’s already reduced rates to the 3% they are currently sitting at.