Australian unemployment is increasing again, creating renewed doubt on the outlook for wage and inflationary pressures, as well as government income tax receipts.
To help explain what’s been driving the latest increase — seeing unemployment lift to 5.6% from 5.4% late last year — Paul and David are joined on this week’s Devils and Details podcast by one of Australia’s leading experts on labour market conditions and inflation, Justin Smirk, Senior Economist at Westpac Bank.
In this episode, we discuss not only what’s caused the latest lift in unemployment but whether those same trends will continue in the second half of the year. And based on the outlook for unemployment, what the implications will be for wage growth, inflationary pressures and official interest rates from the Reserve Bank of Australia (RBA).
Smirk also explains why Australian interest rates are increasing despite the RBA cash rate remaining steady at 1.5%.
The show concludes with a discussion on recent ructions in emerging markets, and whether this is just a healthy correction after a strong rally or a sign of things to come. The panel unanimously agree that bond yields, especially in the United States, will play a crucial role in determining what will happen next.
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