Unemployment rate expected to be steady
(17 August 2015 – Australia) Reserve Bank of Australia (RBA) assistant governor for economics Christopher Kent believes the unemployment rate will not rise substantially from the 6.3 percent recorded in July.
"We expect the unemployment rate to be little changed from recent levels over the next 18 months or so, before declining in 2017," he told the Economic Society of Australia in Brisbane.
Kent noted the economic adjustment with a downturn in mining investment and low wage growth.
"Even though low wage growth works to constrain the growth of incomes for those who are employed, it also supports incomes by encouraging more employment than otherwise," he said.
"The behaviour of wages during the current episode has been comparable to the experience around the recession," Dr Kent said.
But this isn't necessarily such a bad thing, he said, as the jobless rate could have been even higher if wage growth had not slowed in response to rising unemployment.
The services sector in particular has helped the economy readjust.
"About half of us are now employed in the service industries. This has increased from about 45 per cent two decades ago," Dr Kent said.
Low wage growth combined with a tumbling Australian dollar is also helping businesses to be more competitive, he said.
Earlier in the year the RBA was forecasting the jobless rate to peak at 6.5 percent in mid-2016.
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