Australia’s unemployment rate may be close to its peak, creating implications for the economy and, as a consequence, interest rates – according to RBA assistant governor Christopher Kent.
Kent noted there may be less spare capacity, or labour market slack – i.e. the availability of workers within Australia’s labour market – than previously anticipated.
Kent’s explanation was a slowdown in population growth, slower wage growth and a compositional change in economic activity.
According to the ABS, the working-age population has been growing by 1.7% pa, but the total population growth has dropped from 1.8% in 2012 to 1.4% in 2014.
Kent says the chief reason for this was slower immigration and the weakening in Australia’s labour market conditions relative to those of other countries.