Unemployment expected to keep edging higher in ABS data

February 12, 201510:10 am353 views
Unemployment expected to keep edging higher in ABS data
Unemployment expected to keep edging higher in ABS data

Economists expect Australia’s unemployment rate to rise when official figures are released later this morning.

Australia’s unemployment rate fell to 6.1 per cent in December after rising steadily last year.

Most economists surveyed by Bloomberg expect the unemployment rate to have risen again in January — to 6.2 per cent.

That would mean about 10,000 jobs were lost from the economy during the month.

St George senior economist Jo Horton said she expects the number of jobless to rise even further during the year.

“We’re expecting that lift to continue a little bit into mid-year so you’d be looking in the mid-6 per cent range by mid-this year, but then for the unemployment rate to start to edge lower after that,” she said.

Deutsche Bank senior economist Phil O’Donaghoe is more pessimistic, and said last week’s interest rate cut by the Reserve Bank will not dent unemployment.

“I don’t think it’ll be enough, just given the big declines in the terms of trade, the global backdrop,” he said.

“We’ve got unemployment getting up to about 6.75 per cent by about the middle of next year before starting to tick lower.”

That is more in line with the Reserve Bank’s current forecasts, which do not anticipate the unemployment rate dropping back below 6 per cent before mid-2017.

Jo Horton said it is driven in part by more people entering the workforce as the population grows.

“Even though we are seeing growth for example in job ads, that’s probably not enough to absorb the number of new people moving into the workforce and so you are seeing that unemployment rate rise,” she said.

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