Australia’s jobless rate is expected to drift higher, despite the recent pickup in economic data and improvement in consumer and business confidence.
The unemployment rate is forecast to rise to 5.7 per cent, from 5.6 per cent, when official labour force figures for October are released on Thursday, according to an AAP survey of 15 economists.
The number of people with jobs is expected to rise by 5,000 while the participation rate – the percentage of the working-age population either in work or looking for a job – is expected to remain at 64.9 per cent.
Although there has been a recent uptick in business and consumer confidence, it’s still too early for that sentiment to have filtered into the economy, BlackRock head of Australian fixed income Steve Miller said.
“It’s quite clear that there has been a strong bounce in business and consumer confidence post election, but I think it’s probably too early for that to have fed into the numbers,” Mr Miller said.
“We’re seeing some promising occurrences in the housing market but household spending remains subdued, business investment outside of mining remains subdued, mining is at a peak and all of those things suggest to me that growth is going to be below trend for an extended period.
“Australia is still growing below trend and if we’re still growing below trend, employment growth is generally weaker and the unemployment rate should generally drift higher.”
Mr Miller expects unemployment to reach six per cent in the first half of 2014.
A lower Australian dollar would help the economy, and if that doesn’t occur, another rate cut could be on the cards next year, he said.
HSBC chief economist Paul Bloxham said employment would improve in coming months as economic activity begins to pick up.
“We think that October will still see the labour market looking loose but we think that, in coming months, we’ll start to see a bit of an improvement as the pickup in confidence and asset prices feeds through to some more employment,” Mr Bloxham said.
“The housing market is lifting and that’s going to feed through to jobs creation in coming months.”
A modest upswing in non-mining sectors, marked by the housing recovery and recent stronger economic data, showed that the economy was rebalancing as the mining investment boom winds down, Mr Bloxham said.
