- Warren Hogan, chief economist at ANZ
Australia's unemployment rate unexpectedly dropped in December as more than forecasted jobs were added in the reported month. The jobless rate in the South Pacific country inched lower to 6.1% from downwardly revised 6.2% in the preceding month, and compared with economists expectations for the unemployment rate to remain stuck at 6.3%. Improvement in the labour market appeared to be a broad-based, with joblessness falling across most states. The Australian Bureau of Statistics also reported that the number of people who found work in December soared by 37,400 to 11.67 million, versus market expectations of 5,000 newly employed. Moreover, the participation rate climbed to 64.8% of the population, up from 64.7%.
Most economists expect that the unemployment rate will remain around current levels this year before starting to moderate in 2016, especially as the working-age population continues to grow. According to the Australian Bureau of Statistics, the working age population is growing by around 26,500 per month, which has been too many to fill the available jobs. ANZ bank revised its interest-rate forecast for Australia, saying it now expects the Reserve Bank of Australia to slash the official cash rate by 50 basis points in the first half of the year, highlighting that current weakness in the nation's economy will force the central bank to further ease monetary policy.
© Dukascopy Bank SA