Softer Employment Figures Could Ease Inflation Concerns

1

The growth rate of wages has been experiencing a decline, and forecasts suggest a slight rise in unemployment, though the labour market remains relatively tight. RBA Governor Michele Bullock has noted that while the labour market shows signs of cooling, full resolution of inflation concerns remains elusive.

This follows the RBA's recent cash rate cut, the first in over four years, which had been executed with caution due to ongoing economic uncertainties. Bullock emphasized the mixed signals being observed, with certain job market metrics indicating sustained economic strength, which might inadvertently hinder a smooth disinflation process.

Recent data revealed a slowdown in annual wage growth from 3.6% to 3.2%, a development welcomed by the RBA as it could lead to reduced service inflation, according to KPMG economist Terry Rawnsley. Such trends may pave the way for future interest rate reductions throughout 2025.

Adding to this narrative, an expected rise in unemployment figures—from 4% to 4.1%—may further reassure the central bank. Although the increase is modest, as noted by CommSec economist Ryan Felsman, it contributes to ongoing economic adjustments amidst a historically tight job market.

Nevertheless, a broader economic challenge looms with persistently low productivity growth, a potential driver of inflation if wage growth outpaces productivity improvements. The RBA has identified this as a significant risk to the country's financial stability. According to Deloitte Access Economics' David Rumbens, enhancing productivity is crucial for economic growth and improving living standards. He suggests that both market and non-market sectors need strategic investments and reforms.

The Australian economy, despite recent interest rate cuts and monetary policy adjustments, faces a complex landscape with variable indicators. As experts ponder the path forward, sustained productivity initiatives and economic reforms are poised to become pivotal in navigating these challenges.

Published:Thursday, 20th Feb 2025
Source: Paige Estritori

Share this news item:

Finance News

Telstra Boosts Dividend and Announces $750 Million Share Buy-back 20 Feb 2025: Paige Estritori Telstra, Australia's leading telecommunications giant, has unveiled a significant financial move with an increase in its dividend and plans for a substantial share buy-back initiative. Following a notable 7.1% rise in first-half profit, the company aims to allocate up to $750 million for repurchasing shares. - read more

Victoria's Land Tax Shift: A Boon for First-Time Home Buyers Amidst Investor Retreat 20 Feb 2025: Paige Estritori In recent findings by Ray White, reports indicate a notable retraction of property investors from Victoria due to increased land tax rates introduced by the state government. The data highlights that investors owned over one-third of Melbourne homes auctioned by Ray White in the past year and 32.2% of regional Victorian homes. - read more

Softer Employment Figures Could Ease Inflation Concerns 20 Feb 2025: Paige Estritori In light of recent economic indicators, Australia's central bank may find comfort in softer job growth numbers. Despite earlier concerns over potential interest rate hikes, the Reserve Bank of Australia (RBA) could see current trends as easing pressure on inflation. - read more

FAAA Questions Significant Rise in AFCA Claims Handling Costs 20 Feb 2025: Paige Estritori The Financial Advice Association of Australia (FAAA) is pressing the Australian Financial Complaints Authority (AFCA) to justify projections indicating a substantial increase in its claims handling costs. According to an actuarial report, these costs are expected to jump from $12,450 per claim in 2024/25 to $21,334, a surge that raises concerns among financial advisors and industry stakeholders. - read more

NAB's Quarterly Profit Decline Amid Industry Competition and Rising Costs 19 Feb 2025: Paige Estritori National Australia Bank (NAB) has reported a $1.7 billion net profit for the final quarter of 2024, reflecting a 1 percent decrease compared to the average of the prior two quarters. The dip in profits is attributed to intensified competition within the financial sector and escalated costs associated with financial crime prevention and internal wages. - read more