Westpac Economics expects Australia’s unemployment rate to drift higher through next year, before landing at around 5.4 per cent towards the end of 2019.
This is slightly above the 5.3 per cent in labour market figures out last week, but down from the peak of 5.8 per cent in March last year.
Our economics director Justin Smirk, who joined me in the studio today, explains this movement is expected to come off the back of a slight slowing of employment growth driven by uncertainty in the first half of next year related mainly to the Federal Election.
And on the big question of wages growth, we are still waiting for a meaningful pick up.
While we expect a slight uplift in wage inflation in the next year, our view is that achieving 2.5 per cent by the end of 2020 is about as good as it will get, constrained by a few factors including employers’ laser focus on cost control, ongoing uncertainty in the jobs market and relatively elevated underemployment.
For details, read the by Westpac Economics.
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