With economic growth ticking higher, the next instalment of “how’s the economy going” will be with the labour market data next Thursday.
Over the past year, the growth of employment has been impressively strong to the point where the unemployment rate has fallen below 5.5 per cent for the first time in four years. The RBA is banking on further improvements, especially in the form of a lower unemployment rate, to deliver a much needed increase in wages and inflation.
Without a pick up in wages growth, consumer spending is likely to remain subdued and with that, the overall rate of expansion a little sub-par. With GDP growth in the second half of 2017 remaining reasonable flat, it would be a surprise to see the unemployment rate fall from the current 5.4 per cent.
Source: RBA
