RBA report points to further rate cuts
(16 May 2012 – Australia) The Reserve Bank of Australia (RBA) has stated inflation is expected to remain low and that the non-mining economy needs to create more jobs to contain unemployment.
Deputy Governor Philip Lowe told a Davos Connection forum in Melbourne that employment in the non-mining-related part of the economy would need to grow 0.75 to 1 percent a year to keep the unemployment rate from climbing.
RBA research showed the mining-related economy accounted for 16 to 17 percent of GDP rather than the widely accepted 10 percent.
'Our analysis shows mining investment draws significantly on construction activity, which in turn generates activity in industries such as business services, manufacturing, transport and wholesale trade,'' he said.
'Defined this way, mining-related employment accounts for around 8 per cent of total employment, although only around 2.75 per cent of the workforce is employed directly.
'It would not be surprising if, over the next few years, growth in mining-related employment, broadly defined, was as high as one-half of the total growth in the Australian workforce.'
Inflation was far less of a concern than the RBA had expected. More of Australia's domestic demand was being met offshore than had been predicted, putting 'less pressure on domestic capacity than earlier expected'.
Abstracting from the effects of the carbon price, inflation was set to stay near the bottom of the bank's 2 to 3 percent target band for the next one to two years.
RBA research showed the mining-related economy accounted for 16 to 17 percent of GDP rather than the widely accepted 10 percent.
'Our analysis shows mining investment draws significantly on construction activity, which in turn generates activity in industries such as business services, manufacturing, transport and wholesale trade,'' he said.
'Defined this way, mining-related employment accounts for around 8 per cent of total employment, although only around 2.75 per cent of the workforce is employed directly.
'It would not be surprising if, over the next few years, growth in mining-related employment, broadly defined, was as high as one-half of the total growth in the Australian workforce.'
Inflation was far less of a concern than the RBA had expected. More of Australia's domestic demand was being met offshore than had been predicted, putting 'less pressure on domestic capacity than earlier expected'.
Abstracting from the effects of the carbon price, inflation was set to stay near the bottom of the bank's 2 to 3 percent target band for the next one to two years.
Subscribe