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ANZ analysts are having doubts that the Australian employers can continue to hire at the recent strong pace, due to the softer economic signals of the last past two months.

Key Quotes

“Australia’s unemployment rate dipped in February to 4.9%, its lowest since 2011. That and another drop in the labour underutilisation rate are providing most households with some financial security. But strong jobs growth hasn’t translated to higher wages growth, and consumer sentiment has fallen this year. Lowered borrowing capacity, high levels of debt and falling housing prices are having a dampening impact.”

“We doubt that Australian employers can continue to hire at the recent strong pace, given the softer economic signals of the last past two months. That doesn’t mean there won’t be more jobs growth and a lower unemployment rate, but annual employment growth of 2-3% seems unsustainable.”

“The RBA’s March Board meeting minutes noted the inconsistency of improvement in the labour market and the apparent slowing of output growth in the second half of 2018. It will want to be sure which indicator is telling the full story before acting. That is why we continue to think rates will remain on hold, unless the labour market shows sudden weakness.”