More Australians are out of work and wages growth is stagnant, new data shows. It’s good news for inflation, but the national mood may not stomach it for long.
The Australian economy is slowing from its break-neck pace of expansion, according to new data, finally giving the Reserve Bank good reason to shelve interest rate hikes.
The latest unemployment data shows more Australians are now out of work, as the central bank squeezes the economy. As the next chart illustrates, the unemployment rate jumped from 3.5% in March to 3.7% in April, seasonally adjusted, confirming the turning point in the labour market has indeed passed. More people were jobless in April than in March, and of the employed, more people had part-time jobs.
The RBA is concerned with keeping the labour market at a level that doesn’t generate runaway wages growth, which further fuels inflation. The rise in unemployment is a sign that its efforts are working. Higher unemployment means less power for workers and more capacity for employers to find staff without hiking pay.
Read more about whether the RBA will properly pause interest rate hikes.
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